Are Pringles potato chips? Does Santa wear festive items? Is a tomato a fruit or vegetable? These questions sound like fun brainteasers, but the answers to each of these questions was worth millions of dollars. This video dives into a part of the law to find out.
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Is tomato a fruit or a vegetable? When Santa gets dressed up, is he wearing festive attire or a workplace uniform? And Pringles, are they potato chips? Now they might sound like some fun philosophical questions for a long car ride, but every one of these questions went to a Court of Law. And the answers for each of them was worth millions of dollars. So give some thought to what you think and see how your answers compare.
Now you've probably heard this debate before, so to dive into a short answer, in the world of botany, it's that part of the plant that holds the seeds, so yes, it's a fruit. But in the kitchen, in the culinary world, it's the savoury part of the plant. So yes, it is a vegetable. And this actual question was taken to the Supreme Court of the United States, literally the highest court in the country. So why is that? Well the answer is taxes, and tariffs in particular.
A tariff is an amount of money you pay when you bring your product into a country, and it's usually complex and boring. But not today, we're gonna be talking about X-Men and Santa and Pringles.
So it's in the US, and the 1883 Tariff Act came into force. And what it said is that imported vegetables had a tax on them, but fruits didn't. So a fruit and vegetable seller called John Nicks said, "Well I don't wanna pay the tax, so tomato's, they're fruits, and here's the dictionary to prove it." And the Supreme Court answered unanimously, a tomato is a vegetable. "The ordinary meaning must be used by the court. In this case, dictionaries cannot be admitted as evidence." But don't think this is the final legal word on this, the European Union was aligning all of it's food labelling and spent 14 years defining what is a jam, a jelly, a conserve and a marmalade. And under that law, they said that a tomato is considered a fruit. And due to Portugal's love of carrot jam, so is a carrot.
The story of X-Men is all about acceptance, so it was a strange move that their owners argued to Customs that X-Men should not be considered human. Or more specifically, that X-Men figurines should be considered non-human as opposed to human, which would put them in the same category as dolls, which has a higher tariff.
[Narrator] X-Men, X-Men.
[Narrator] Wolverine flashes claws of steel, while Cyclops turns on laser power.
Lost again Magneto.
[Narrator] X-Men and evil mutants each sold separately from Toy Biz.
And sad news for any X-Men wanting to integrate, the Judges ruled that no, they're not human.
Under the US Customs Law, there's no neat box for Santa Suits, or even some costumes. So because of this, the people importing it would love to consider this a festive item which comes with no tariff attached. As opposed to clothing where there is taxes applicable. And this is the product in question, a nine piece Santa Suit that made it's way to the US Federal Court. It consists of a Santa hat, beard, jacket, wig, pants, belt, gloves, sack and shoes. If it's clothing it attracts a duty, but if it's a festive item, it's duty free. So were you correct? Well you were if you said yes, yes, no, yes, no, yes, no, no, yes. They literally broke up this item into five different Customs Codes.
And now, into a court case about our Pringles. , and a case worth millions. In the UK, food generally has zero value added tax, except for potato crisps and similar products made from potato or potato flour, which attract a VAT of 17.5%. So the question becomes, is this a potato crisp? And is it made out of potato? Pringles owner Proctor and Gamble argued that because this is only 42% potato flour, that it lacks the 'potatoness' to be considered a potato crisp. Now their case was perhaps undermined by ads like this from Pringles.
[TV]Hey mom, you forgot the potato chip.
They're right here.
I don't believe it.
Ah, let's see! ♪ Pringle's Newfangled Potato Chips. ♪ And what do you think? It's a chip, pay your tax. So Procter and Gamble were required to pay over 160 million dollars and tens of millions of dollars per year. Getting a bunch of lawyers to argue about what category a product falls into is one thing, but things get more extreme.
Welcome to the world of tariff engineering. That is actually redesigning your product so it falls into a lower tax category. And it turns out, it shapes a lot of the thing around us that you might not have realised.
The camera I'm filming on for example, can record for a maximum length of time of 29 minutes and 59 seconds.So why is that? Well it turns out that's the maximum length of time that you can call yourself a camera, rather than a video camera and reduce the taxes. Have you noticed that TV's these days include a USB port? Though that might be useful for some people, but I imagine a lot of people don't use it.
But it turns out that by doing that, it transforms the product into a TV that includes a video recording or reproducing apparatus. And that counts and lowers the tax.
But I think my favourite example of tariff engineering is Converse All Stars. Now you might look at these and think they're shoes, but they're not. So what are they? Well it turns out they're slippers. One of the key differences between shoes and slippers is the material used for the sole. So if it's a fabric material, it's more likely to be considered a slipper.
And that's why the base of Converse All Stars is furry, it's actually a fabric. In fact they went and got a Patent for this exact topic. Tariff engineering is legal, as long as you're not lying about what you've done. One example of a failed attempt was Feather Company, who make products like bags and clothes out of feathers.
So to import their feathers, what they were doing is they were stapling them to handles and describing their products as feather dusters. Now it was all poor quality, but once it got into the country, they would disassemble them and use them for something else. To that, the Customs said, "No.
I'm Julian O'Shea, thanks for watching. I spent ages looking at tariff documents putting this together, so if you want me to continue to waste my time doing such things, I urge you to subscribe. Take care.