The nine-member panel, headed by respected journalist and businessman Pierre Lescure, said in the keenly awaited report that the revenue gained from the proposed new taxes could help fund artistic and creative ventures.
But the report said that demands for compensation from Google by content providers such as newspapers - which say the search giant makes significant advertising revenue from referencing their material - were legally "doubtful".
France and Germany are considering imposing compensation schemes on Google as the company has refused to reach any deal with media outlets.
The report made 75 proposals in all and called for the scrapping of the Hadopi agency created to monitor and enforce internet copyright laws.
It said the task of fighting internet piracy should instead be handled by the CSA agency, or the Higher Council for Audiovisual media, which regulates electronic media in France.
It also called for a massive scale back in controversial punishments for piracy, saying internet connections should no longer be suspended and fines should be slashed from a maximum of €1 500 ($1 950) to €60, which could be then raised for repeat offenders.
The report said piracy could also be contained if satellite and cable providers offered new films on demand shortly after their release.