Legal News

In Big Win for P&G, Pringles Found to be ?Not Potato Crisps?

By Ashby Jones

We’ve often wondered about Pringles, the chips that come neatly and unnaturally stacked in a can, but we’ve never had reason to question whether they’re actually potato chips. That is, until now.

On Friday, a British tax court ruled that Pringles are not, in fact, potato crisps — and therefore are not subject to Britain’s 17.5% sales tax. Here’s coverage from Bloomberg and Paul Caron’s TaxProf Blog. Click here for a copy of the opinion.

According to the Bloomberg story, most food in the U.K. is not taxable. The national tax office, however, had argued that Procter & Gamble’s Pringles fall into a category of taxable food for potato chips “and similar products made from the potato, or from potato flour, or from potato starch.”

But at a hearing in May, P&G’s lawyers claimed that Pringles don’t look, feel or taste like a regular potato chip (you’d get no argument from us on that). The lawyers also claimed the snack isn’t made like a chip since it is cooked from baked dough, not potato slices. According to the judgment, P&G’s lawyers had argued that potato chips “give a sharply crunchy sensation under the tooth and have to be broken down into jagged pieces when chewed.” A Pringle, they continued “is totally different . . . a Pringle is designed to melt down on the tongue.”

The tax court agreed, though it didn’t address what Pringles are. So, being the intrepid reporters that we are, we went to the Pringles Web site and clicked on “nutritional information.” We’re not sure this clears it up, but here’s the list of ingredients for the original red-canned snack:

INGREDIENTS: DRIED POTATOES, VEGETABLE OIL (CONTAINS ONE OR MORE OF THE FOLLOWING: CORN OIL, COTTONSEED OIL, SOYBEAN OIL, AND/OR SUNFLOWER OIL), RICE FLOUR, WHEAT STARCH, MALTODEXTRIN, SALT AND DEXTROSE. CONTAINS WHEAT INGREDIENTS.

Full post as published by Law Blog - WSJ.com on July 07, 2008 (boomark / email).