When Grundig went to court...

[Colourstar]

I'm lucky enough to own several binders of Electrical & Radio Trader from the late 50s and early 60s, and they always make a fascinating read, not least for news snippets like the attached from 18/2/61

To summarise, it seems that Grundig were seeking a High Court ruling to the effect that tape recorders they exported to Britain in 1958/9 should qualify for a lower rate of import duty.

The company stated the TK5, TK8, TK20, TK25, TK30 and TK830 machines were, as despatched, incapable of recording and reproducing music, thus should be classed as dictation machines and qualify for 10 percent import duty as opposed to the 20 percent charged on tape recorders...

Why? It seems Grundig 'removed a resistor' prior to import that lowered the frequency response enough to render them as suitable for speech only, then re-inserted the resistor once the machines arrived in Britain to restore hi-fidelity performance!

I had to read the article twice to check it, and no, it wasn't published on April 1st! Has anyone heard this story or anything like it before?

Steve J

[Boom]

On a similar legality during the early 1980s some AM CB radios
were imported into the UK with the PLL xtal sellotaped inside
the case so that technically they were not illegal working CB
units.

[julie_m]

Yes, and if you cut the plug off a lamp it's officially an ornament .....

The real stupidity is charging different rates of tax on different sorts of goods in the first place (cf. the question of whether Jaffa Cakes were cakes or biscuits).

[Michael Maurice]

It reminds me of the story I heard of how the the original owner of MGM wanted to import some shoes but didn't want to pay import tax, so he got the manufacturers to send one consignment of right foot shoes to one port and another consignment a month later of left foot shoes to another port.

At customs he refused to pay the duty so the goods were impounded to be sold at auction. Of course no one would by only Right foot shoes so he bought them off the customs for $1. He then did the same for the other consignment of left foot shoes, he now legally had both left and right shoes for normal distribution. Clever eh!

[Peter.N.]

Lateral thinking.

[brenellic2000]

It was the EEC tariff problem!

Component parts were levied a lower import tariff than fully assembled machines to protect local industries. The EEC was a Customs Union (the EU is a full blown political union) wherein there were no tariffs on cross-border trade between EEC members (like wise Britain with EFTA). So Britain / EEC countries either supplied CKD kits (complete knock down) to avoid tariffs and protect local assembly jobs (which was the core of the EEC social funding). The court case tried to get around it!

Many British and German companies set up manufacturing/assembly plants across the world to avoid high tariffs. But GATT (now WTO) has reduced tariffs to 2% and banned unfair barriers to trade. Thus, 1950s Customs Unions (EEC/EU) are largely obsolete which is why the EU became full blown political union and politicians use scaremongery to claim that if we left the EU to rejoin EFTA or NAFTA, Britain would disappear!...

... yet the EU now has free-trade and movement of people with the South American free trade area, but they are not bled dry by the EU and nor are their laws dictated to them by Brussels!

Does that answer Colourstar's queustion?

As to Jaffa cakes... basic foods are VAT free - if you tart it up, you've added value and that adds value (ie profit) which is taxed. The cake v biscuit argument comes down to the basic food's durability - ie whether it has been modified to have a prolonged life and thus avoid natural decay.

Britain had to adopt VAT on joining the EEC - VAT was essentially to fund the EEC Social Fund via a % of GDP - ie added value from trade and commerce! They were blighters!

Barry

[Colourstar]

Thanks Barry for the very full explanation. What a tangled web it was.

I wish you hadn't mentioned Jaffa cakes though... Mmmm!


Steve

[davehills]

I'm pretty sure the Jaffa Cakes thing hinged on whether they went soft or hard with age.

Biscuits go soggy as they get older; cakes go hard. As Jaffa cakes go hard with age it was deemed that Jaffa cakes are in fact cakes and not biscuits!

[ppppenguin]

However taxes and tariffs are arranged, people and companies will try to navigate around them. VAT replaced purchase tax. PT was only levied at the point of retail sale, had all sorts of obscure classifications and was no doubt avoided and evaded in various ways. When we had 8% VAT on everyday goods and 25% VAT on so called luxuries the electronic component business was delicately split down the middle. Caused no end of trouble. Of course since most components were sold from business to business, many of which were VAT registered the actual rate was immaterial.

[dominicbeesley]

Erm, the UK wasn't in the EEC or (Common market or whatever) in the 60s it was our own protectionist import duties...probably the only thing that kept most of the UK electronics industry going at that time.

Anyway, you should have been in Australia in 1999/2000 when they decided to "simplify" their tax and duty system. The resulting legislation was an absolute nightmare....and yes they had the jaffa cakes problem but IIRC it was all to do with if a bun had currants in it...

Dom

[brenellic2000]

Jaffa v Biscuit - the biscuit is a basic mix of flour, dried by high heat to dissipate moisture; cakes include added ingredients, mainly self-preserving sugars which retain mositure wheras busciuits don't and thus readily absord moisture in a short time -hence the 'legal definition' for VAT.

The original 8% VAT applied to industrial products - the standard was 15% and 25% luxury. Don't forget there was also a Zero rate for 'safety equipment', childrens' clothes, newspapers etc., but while these are set by each country (some charge VAT on childrens' clothes) they have to within limits set by Brussels!

Yes, Dom, we were not in the EEC (The Six) in the 1960s, which was why we helped set up a non-sociopolitical EFTA in 1960 with 8 other european nations, but the EEC set a 14% import tariff, we set our own tariffs to counteract the EEC's! British tape recorders could avoid EEC tariffs if supplied a basic transport deck... plus heads... plus amp... etc. Likewise, Grundig (UK) brought in German made decks etc but manufactured in the UK identical spec cabinets etc.

The GATT (WTO) talks largely eliminated these discriminatory tariffs but the EEC/EU continued its self-protectionst tariffs, particlulary in major industries through subsidies and in foods to protect their CAP - which included food from former French colonies (classed as pseudo-members of the EU), contrary to WTO rules - hence the EU banana wars which they have finally agreed to halt!

The one thing the EU does not believe in is free international trade, unless it is to their self-protectionist benefit! They forced the closure of industries through never ending regulations then wonder why leather and shoe-uppers are now tanned and stitched in India for the UK; cast-iron is cast in China for the UK; today's super-efficient but highly toxic batteries are made in China... and all at £20 per week! No wonder the EU claims 50% of UK trade (by £) but only around 20% tonnage!, and then winge about China 'dumping' cheap goods! Britain's largest export market is the USA (19%) followed by Germany (16%) France, Italy, Ireland... in fact the only significant EU trade is with the original Six, plus Ireland!

VAT is a 'brilliant' system as it doesn't cost the taxman a penny to collect - 'we' do it for him for free (but can't claim it against tax!) far cheaper than even the Chinese worker. But don't forget, whereas PT could be varied at will - and was - to regulate spending/inflation, VAT can't so readily as the parameters are set by Brussels for the entire EU. Their object is a single taxation and single currency - only possible by a single self-protectionst goverment! The last time that happened was with the Soviet Union and look at what happened to that as each sought their independence... only to surrender it to the EU... makes you think!

Damn, my VAT-free biccy has gone soggy!!

Barry

[Mike Phelan]

I think that now we're on to non-biscuits Grundig and the EU, time to clear up the crumbs

Thread closed.