France eyes profits from smartphones and tablets

France is preparing to impose taxes on Apple and Google to finance the production of art, films and music in the country, in a move likely to worsen relations between business and Francois Hollande's socialist government.

The president has asked businessman Pierre Lescure to find ways of funding the arts, as the economy continues to struggle.

France slipped back into recession in the first quarter of the year and the European Commission expects the economy to contract 0.1 per cent in 2013.

Mr Lescure believes a 4 per cent tax on the sale of smartphones and tablets, namely Apple iPhone and iPad and Google Android products, could boost government revenues as consumers spend more on hardware than on content.

"Companies that make these tablets must, in a minor way, be made to contribute part of the revenue from their sales to help creators," Culture Minister Aurelie Filipetti said.

The move would bring Apple and Google in line with TV and radio broadcasters and internet service providers, which contribute part of their earnings to fund the arts in France. But, coming hard on the heels of Mr Hollande's moves to increase taxes on the rich and force cuts in bankers' bonuses, the proposed tax has already stirred up controversy. DigitalEurope, which lobbies in Brussels for smartphone makers, said the tax was "a move in the wrong direction".

It also risks alienating further the world's leading technology companies after Arnaud Montebourg, the Industrial Renewal Minister, blocked Yahoo!'s bid to buy the Gallic version of YouTube.

French officials are pushing to ensure their artistic products remain exempt from free trade rules during talks on a planned trade agreement between the European Union and the US. President Barack Obama will visit Europe next month to launch the talks which, if successful, would create the world's largest free-trading bloc.