Pringles, PS2s, and philosophy: Big business tries to avoid taxes

Philosophy, traditionally the least pragmatic of all university degrees, is coming into increasing use in the corporate world. International trade is forcing officials to determine the fundamental identity of potato chips, video-game players, and even vegetables -- and wrestle with those definitions in the courts. Such decisions have always required the wisdom of Solomon; today, they're ever-more reliant upon the analysis of Aristotle.

In one recent judicial decision, Britain's Supreme Court of Judicature has definitively determined the taxonomy of Pringles potato chips (or "crisps"). For those of us who grew up eating them out of a can unambiguously labeled "potato chips," the question was moot. But their bizarre list of ingredients, combined with an idiosyncrasy in the U.K. tax code, transformed what was once a culinary certainty into an issue for serious debate.

In truth, it's not all that easy to determine what Pringles chips are. The artificially molded slabs are made of a strange mix of ingredients, including dehydrated potato, vegetable oil, rice, wheat, maltodextrin, salt and dextrose. Potatoes are predominant, comprising about 40% of the mash-up, but Pringles' potato pedigree is far from pure.

At least, that's the argument of Proctor and Gamble UK, which has attempted to characterize Pringles as "savory snacks," not "potato crisps." The designation would have saved the manufacturer many millions of dollars. While most foods are exempt from paying Britain's value-added tax, potato chips are liable for a 15% tariff, which in Pringles's case translates to $160 million. Luckily for P&G, the company has been paying the tax pre-emptively, so it will not be stuck with a huge fine.

The VAT and Duties Tribunal initially ruled that the savory snacks were indeed potato chips: Pringles, it argued, are "made from potato flour in the sense that one cannot say that it is not made from potato flour." (Fair enough: any other ingredient could be traded for the phrase "potato flour" without substantively changing the meaning of that comment.)

Twisted lignuistic tangles aside, the issue stood until an appeals board reversed the ruling with a strict constructionist argument, noting that Pringles chips have less potato than a standard potato chip. Thus, while previous court argued that a minority potato composition translates into total potato-ness, the latter one stated that the condition of potato-osity is all-or-nothing.

In the end, the court of final appeal determined that Pringles are more potato than not, which obliges P&G to pay its taxes. Lord Justice Jacob, leader of the court, noted that it came down to a matter of "overall impression," and that Pringles gave the impression of being potato chips. Moreover, he dismissed the all-or-nothing compositional argument, noting that, under the marketer's logic, "a marmalade made using oranges and grapefruit would be made of neither -- a nonsense conclusion."

This is not the first time the national courts have been embroiled in such philosophical jousting. A few years ago, Sony fought a drawn-out battle to have the PlayStation2 characterized not as a game console but a computer, which would have exempted it from European Union taxes and saved Sony $63 million. Oddly, in addition to criticizing the philosophical and legal argument underlying Sony's battle, Lord Justice Chadwick also attacked the company for the "inordinate length," "discursive quality," and "hyperbole" of its case.

But the battle over definition is particularly intense when it comes to agricultural produce. Years of genetic modification have created vegetables, particularly corn, that contain large segments of alien DNA. While these hybrids produce hardier, bigger crops, they have also caused allergic reactions as consumers have come into contact with unexpected genetic strands. In fact, some experts claim that the growing peanut allergy crisis derives from the use of soybeans that have been genetically modified with the DNA of Brazil nuts.

As Big Corn produces a new strain of grain designed for ethanol production, the issue is heating up again. The new crop, called (weirdly) Event 3272, contains DNA from "exotic marine microorganisms." Manufacturer Syngenta says there's little possibility of Event 3272 entering the food supply, but only four countries have approved its trade. Even in the U.S., Event 3272 has faced major opposition from scientists and food activists.

While the battle over genetically modified corn continues, it will be interesting to see where the next taxonomic fight erupts. In an economic climate where taxes, scientists, and lawyers can together transform potato chips into crisps, and game consoles into computers, and corn into seafood, there may be no limit to the magic of philosophical manipulation.
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