Tuesday, June 02, 2009

If The Economist Can Be a Newspaper…

I rest my case.

The real question of course is: What does the U.K. have against potatoes? Tortillas (corn) VAT-free, Kappa Ebisen (wheat) VAT-free, but Pringles (potatoes) not? Is this by any chance a British/Irish thing?

9 comments:

James said...

Even with all the exotic flavors we have in Japan, I have yet to discover a type of Pringles that actually tastes good.

Those vile things should never be considered potato chips, not even for tax purposes!

Our Man in Abiko said...

There was a similar case over whether a Jaffa Cake was indeed a biscuit (US "cookie"). I forget which it was and what the tax implications were, but the case provided an excellent definition of the difference between a cake and a biscuit: A cake goes hard when you leave it out; a biscuit goes soggy. There you are.

Jun Okumura said...

Pringles and their ilk are fake potato chips, created for the convenience of the commercial distribution system. But rest easy, James. Not even P&G claims that Pringles are potato chips, and the Lord Justice certainly did not so rule. In fact, the British VAT Act says:

“Any of the following when packaged for human consumption without further preparation, namely, potato crisps, potato sticks, potato puffs and similar products made from the potato, or from potato flour, or from potato starch, and savoury products obtained by the swelling of cereals or cereal products; and salted or roasted nuts other than nuts in shell.”

Since the Pringle is made from (potato) flour, it’s actually a flatbread, a potato-flour version of the Norte Americano tortilla. If anything, it’s a potato tortilla. In any case, it’s certainly not a “chip”, though the British “crisp,” which reflects the deep-fry method of production, is technically accurate.

Incidentally, it appears that tortillas are safe from taxation, since the VAT covers only “savoury products obtained by the swelling of cereals or cereal products.” Tortillas aren’t obtained by swelling, are they? Which raises another question: Why the distinction between swelled and non-swelled products?

OMIA: The (chocolate-covered) Jaffa cake case came up because cakes and biscuits (yes, that’s what we called them in the English-Canadian community in Montreal) are exempt from VAT unless they are chocolate-covered biscuits, in which case they are subject to the VAT. Chocolate-covered cakes are exempt, God knows why the distinction. You’re right; cakes do dry up while biscuits go limp. So why does one group release moisture, while the other loses it? It’s a great science project for the kids.

Get A Job, Son! said...

Excellent posting, and set of follow-up comments.
For me thisis the best moment...
"The Supreme Court of Judicature had little patience with Procter & Gamble’s lawyerly attempts to break out of the potato chip category"

As some one who has had dealings with P&G, this attempt to shave costs is very much of their company ethos... and hopefully this attempt will blunt their efforts.
But I doubt it.

Jun Okumura said...

Glad you enjoyed it, GAJS, though there’s no reason why P&G should not try to minimize its tax bill like everyone else. The question remains: At what point does a product cease to be made from potato flour and other listed ingredients? 35%? 30%? This particular section of the VAT Act is poorly drafted.

Zach Baran said...

Black Pepper is a great flavor of Pringles. In fact, the best flavor ever.


Then again, everyone is doing the black pepper thing these days. I'm loving it, but what is it with Japanese that they suddenly love the flavor of pepper?

Jun Okumura said...

Zach: Each to one’s taste. That being said, Pringles™ does feel like a soft taco shell, and there’s nothing that pleases me like the brittle, dry-leaf feel of a natural, salty chip sliced and fried from a whole potato. To me, it’s the difference between a meat loaf and a T-bone steak. I’m happy for you that you’ve found a Pringles™ that you really like. Not my type though, those dry, peppery potato products. I need some moisture with the pepper. And haven’t Gaban black pepper potato “chips” disappeared from supermarket shelves?

nyfinances said...

Actually, I like reading The Economist. It teaches an entrepreneur a lot about NY finances, and a business man a lot about world finances.

Jun Okumura said...

Actually, nyfinances, this was a joke. The Economist is a magazine in everything but name, continuing to pass itself off as a newspaper to benefit from the more favorable postal rates. (Or so I remember.) I considered the Pringles’ attempt to pass itself in the U.K. as something other than “potato crisps, potato sticks, potato puffs and similar products made from the potato, or from potato flour, or from potato starch”

I have no complaints about The Economist itself. Some of my best friends are Economist reporters, and I’ve consistently marveled at the high journalistic standards there.