Tax Break

John Fisher, international tax consultant

Archive for the tag “Airbus”

Red Scotch Tape

And then came the 1970s

When Queen Victoria opened the Great Exhibition in 1851, Britain was the world’s leading industrial power, producing more than half its iron, coal and cotton cloth.

 Well, I don’t think Her Late Majesty would be very amused to hear from her great-great granddaughter how the country she bequeathed to her descendants in perpetuity is currently faring in that field (mind you, her grandson Kaiser Bill did a far bigger hatchet job on Germany).

Nothing highlights the shifting sands more starkly than the announcement the other day that, following World Trade Organization approval, the US is to apply ‘the biggest ever’ new tariffs to imports from the EU – and specifically the UK, France, Germany and Spain.

The British air industry knew when to be competitive

The issue has been brewing for 15 years, ever since the US first complained to the WTO that the EU was subsidizing Airbus and others to assist in their competition with Boeing and others. The EU was indeed found to have overshot the General Agreement on Tariffs and Trade and given until late 2011 to comply. The EU did take measures, but in 2012 the US requested the review of a compliance panel, and in 2018 the WTO determined there had been further violations. The WTO finally ruled last week in the US’s favor and the US Trade Representative was quick to issue a list of products to have their wings clipped through new import tariffs.

The list of products to be punished, represented by their Harmonized Tariff Schedule Codes, is long. The first item is, unsurprisingly, aircraft – the prices of which are to be hiked by 10% from later this month.

It is the next item – designed to hit Britain – that is gobsmackingly strange. You would have thought that it would be heavy turbines, trains or ships. No. It is single malt (and only single malt) scotch whisky – together with single malt Irish whiskey distilled in Northern Ireland, if there is such a thing. And no friendly 10% for them. 25% slapped drunkenly on the price.

It turns out that the most effective way to get at what was once ‘the workshop of the world’ is through premium brand whisky. But, it is all so unfair. Check on Wikipedia for ‘Aircraft Manufacturers of Scotland’, and you will be greeted by ‘Defunct Aircraft Manufacturers of Scotland’. In fact, tragically, Scotland’s biggest claim ever to aviation fame was probably the 1988 Lockerbie Disaster, for which they suffered more than enough.

So, sadly, the good people of Scotland (in the interests of full disclosure, I should point out that I am half Scot) are being made to pay for the shenanigans of their southern partners (who themselves are probably far less guilty than the Germans and French , both of whose record on air wars is abysmal).

Who are the Americans trying to kid?

I don’t know what hurts more – Britain’s descent from the industrial world to the spirit world, or the gross unfairness of trade wars. Not much can be done about the former, but the latter should be exorcised before the new mercantilism takes an unbreakable hold.

We are not amused.

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