History 2002: France to Tax HDDs

After taxing recordable optical media, the French Brun-Buisson Commission, which reports to the Ministry of Culture, has decided to go after HDDs, although for now only those used in audio and video devices.

There is some talk, however, of taxing all HDDs, even those in PCs, in the future!

The commission nevertheless determined that such sweeping measures are not in its current mandate, and will leave that decision to the members of the French National Assembly.

Here are the new French duties:
– for HDDs integrated in TVs, VCRs, PVRs or set top boxes: 

– for HDDs integrated in audio devices (Walkmans or home/auto audio systems):

While it’s understandable that artists should be compensated for their losses from pirated work, there are some significant flaws in the new duties. For one thing, they were established based on market studies on percentages of pirating, studies that leave a lot to be desired. These taxes do not take into account the type of HDD capacity, i.e. formatted or not. Nor is it clear why the tax should be based on capacity, rather than a percentage of actual prices (which continue to fall – on second thought, perhaps that’s the answer).

Before you know it, the €15 tax will represent half of the cost of a 15GB HDD (LexyComp is currently offering WD’s 15GB HDD for $44 in quantity 500).

Another problem, one we’ve pointed out in the past, is that with this tax the state is seeking a remedy for its own failure to prevent or prosecute pirating. It’s never been alleged that HDD makers, or their consumers for that matter, are behind the pirating epidemic, so how is it logical to recoup revenues from a presumably honest customer base merely to compensate for a dishonest, and apparently untraceable, criminal element?

In any case, manufacturers are furious about the latest measures, and a French consumer group, UFC-Que Choisir, voted vs. the new policy.

More importantly, these taxes will generate very little revenue for artists in the short term (the taxes only apply to France, so many consumers could presumably buy cheaper multimedia devices in other European countries), since currently in France, if a few audio devices based on HDDs are on the market, virtually no PVRs or set top boxes with integrated drives are selling.

If, tomorrow, France decides in addition to tax HDDs in PCs, how will it go about it – based on what criteria will they select the computers? If the tax is applied to all computers, it’s hard to imagine, based on the current capacity scale, that customers would accept such steep taxes on servers or high-end configurations such as Symmetrix or Shark.

Basically, France has yet again opened itself to ridicule, if only because of its inability to gather the expertise required to establish adequate measures.

This article is an abstract of news published on issue 176 on September 2002 from the former paper version of Computer Data Storage Newsletter.