Paris — the French lawmakers have abandoned plans for a tax on online advertising that had come to know, somewhat incorrectly, as the Google tax.
Late Wednesday, Philippe Marini, a legislator from the Party of President Nicolas Sarkozy, U.M.P. withdrew the legislation seeking to reintroduce the tax plans, just days after the National Assembly had refused.
The measure, which had been approved by the Senate, would have imposed a 1% levy on the cost of online advertising in France. Aimed to address the concern of the French Government that foreign companies of the Internet as Google pay little or no taxes on their earnings in France.
Support for legislation flagged after critics pointed out that it would have had little effect on Google because the company sells advertising aimed at users in France through its subsidiary in Ireland, where tax rates are lower. Instead, French Internet companies complained that they and their advertisers have suffered, thus holding back the development of an economy of homegrown French Internet.
After the rejection of the measure in the Senate this week, ASIC, a trade association for Web companies, including Google, Microsoft and eBay and French companies such as Dailymotion, praised as calls a decision to "save the digital economy."
Often seen as suspicious by the Internet, the French Government in recent months has been stressing the importance of digital technology for general economic development of France.
In may, Mr Sarkozy has convened a meeting of leaders of Internet companies here on the eve of the Group of 8 meeting in Deauville, France. Also this year, has established a National Council, which includes representatives of industry, to advise the Government on issues related to technology.
The proposal for the "Google tax" was backed by organizations representing the content creators and other copyright owners, who noted that income tax revenue from television advertising was used to support the film and television production in France.