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DODGING A TAX BY DISSING PRINGLES
Corporations commonly try to dodge their tax responsibilities, but it’s unusual for one to dis its own product in order to avoid paying.
Yet, that’s what Procter & Gamble has done with Pringles, the salty spud snack stacked in a tube. When Pringles were introduced, they were pitched as a sort of super potato chip, touted as superior because the tube prevented the terrible tragedy of chips crumbling. Personally, I’ve always liked chip crumbles. But so what? Pringles were a triumph of neatness over nature. And now they’ve triumphed over the tax man.
England's tax office claimed that Pringles were subject to a tax that’s applied to products made from potatoes. P&G lawyers, however, scoffed at the idea that a Pringle merited potato status. It doesn’t taste like a chip, they confessed. It gives no crunchy sensation, they demurred. It has a shape that “is not found in nature,” they conceded. Plus, they revealed that while the thing contains some potato flour, it is not made from potato slices.
Still, the tax office argued that Pringles are a potato “crisp,” the British word for chip. Not so, cried P&G’s lawyers, even though the label on tubes of Pringles boldly declare the product to be “potato crisps.” Forget what the label says, countered the lawyers – labels are designed as consumer come-ons, not as legal proclamations. Look at the ingredients, they said – the bulk are corn flour, wheat starch, rice flour, fat, emulsifiers, sugar, monosodium glutamate, and such – not potato. Therefore, concluded the defense, it’s more of a biscuit.
The judge, perhaps taking a bite of the thing, agreed, ruling that Pringles were not “made from the potato” as defined by the tax code. Thus, P&G avoided a tax by maligning the product it advertises so heavily as potato crisps. One wonders: will they now change the label? Nah – that’d be too honest.
“Potato tax won’t apply to Pringles,” Austin American Statesman, July 5, 2008.
“Pringles aren’t potato chips, British judge rules,” www.latimes.com, July, 5, 2008.
“Pringles ‘are not potato crisps’” www.news.bbc.co.uk, July 4, 2008.