Old Hat


Old Bike Australasia - - CONTENTS - JIM SCAYSBROOK Ed­i­tor old­bikemag old­bikeaus­trala­sia

While on a re­cent fly­ing visit to North Amer­ica for a very im­por­tant as­sign­ment (the first birth­day of our grand­son), Mrs Ed­i­tor and I were able to grab a few days R&R in Van­cou­ver, a place I have never seen be­fore. Dur­ing our stay we found our­selves at Trev Dee­ley Mo­tor­cy­cles – Canada’s old­est es­tab­lished Har­ley-David­son dealer and the sec­ond old­est in the world out­side the United States. Part of this huge deal­er­ship is de­voted to a per­ma­nent mu­seum, where there is al­ways a themed ex­hi­bi­tion tak­ing place, so that’s where we headed. That was might­ily im­pres­sive, but talk­ing to the staff in this ven­er­a­ble es­tab­lish­ment re­vealed deep con­cern for the fu­ture of Amer­ica’s most iconic mo­tor­cy­cle brand, and for that mat­ter, its chief lo­cal ri­val, In­dian. You’ve no doubt heard of the sabre rat­tling that has been em­a­nat­ing from Wash­ing­ton, con­cern­ing US-im­posed tar­iffs on im­ported steel and alu­minium. The back­lash to those sanc­tions from the EU has been sim­i­larly well re­ported, with tit-for-tat puni­tive tar­iffs on cer­tain US prod­ucts, in­clud­ing mo­tor­cy­cles – read, H-D and In­dian. Pre­dictably, these iconic man­u­fac­tur­ers have a plan of their own, and that is to take pro­duc­tion off-shore. In H-D’s case it al­ready has es­tab­lished man­u­fac­tur­ing ca­pac­ity in In­dia, Brazil and Thai­land, while In­dian has flown the kite of trans­fer­ring much of its pro­duc­tion to Poland. So the White House mea­sures to shore up lo­cal jobs via tar­iffs look like hav­ing ex­actly the op­po­site ef­fect, with both of these com­pa­nies threat­en­ing to se­verely trim their US man­u­fac­tur­ing.

Like just about ev­ery­thing, there is a les­son in the past. In 1916, the UK Gov­ern­ment im­posed an En­ter­tain­ment Tax – a flat tax on the price of the cheaper theatre seat­ing, es­ca­lat­ing to a heavy im­post on the dearer seats. The en­ter­tain­ment in­dus­try re­acted with vig­or­ous protests that saw the flat tax low­ered, but the stepped tax re­mained, mean­ing that by 1940 the tax on some tick­ets was higher than the ticket price it­self. The US film com­pa­nies were out­raged, with the UK gov­ern­ment reap­ing al­most triple the amount of rev­enue com­pared to the com­pa­nies that pro­duced the ac­tual prod­uct. Fi­nally in 1949, the pow­er­ful J. Arthur Rank or­gan­i­sa­tion de­clared it would cease al­to­gether un­less re­duc­tions were made. The tax was abol­ished in 1960.

How­ever in the in­terim, the wily Chan­cel­lor of the Ex­che­quer, see­ing the writ­ing upon the wall, be­gan to di­ver­sify the en­ter­tain­ment tax into new ar­eas. Speed­way rac­ing was one, which was mys­te­ri­ously clas­si­fied as non-live en­ter­tain­ment and there­fore sub­ject to a tax of 48%, whereas sports such as football and box­ing paid only 15%. This think­ing was rapidly ex­tended to the in­comes of prom­i­nent sports fig­ures who were to be clas­si­fied as en­ter­tain­ers. At its peak, that per­sonal tax rate reached 98%, mean­ing that top rac­ing drivers such as Jim Clark and oth­ers moved to Europe and ceased pay­ing UK tax al­to­gether. Rock stars, such as the Bea­tles, were on a sim­i­lar boat to obliv­ion and fol­lowed suit. Even as late as the ‘sev­en­ties, Bri­tain’s top per­sonal tax rate was 83% and the pool from which it was drawn rapidly di­min­ished as the ex­o­dus con­tin­ued un­abated. Sim­i­larly, the so-called Wealth Tax of 1974 saw a flood of an­tiques and es­pe­cially works of art leave the UK to avoid the im­post, never to re­turn. By 1989, Chan­cel­lor Den­nis Healey, one of the key pro­po­nents of the tax ad­mit­ted, “…you should never com­mit your­self in Op­po­si­tion to new taxes un­less you have a very good idea how they will op­er­ate in prac­tice. We had com­mit­ted our­selves to a Wealth tax; but in five years I found it im­pos­si­ble to draft one that would yield enough rev­enue to be worth the ad­min­is­tra­tive cost and po­lit­i­cal has­sle.”

In terms of qual­ity and pro­duc­tion ef­fi­ciency, it prob­a­bly does not mat­ter much where fu­ture Har­leys and Indians are ac­tu­ally built, but try telling that to the work­ers in Mil­wau­kee (H-D) or Spirit Lake, Iowa (In­dian). Boom­ing loud in the cor­ri­dors of his­tory are chilling ex­am­ples of the col­lat­eral dam­age and grubby consequenc­es of schemes that have not been cor­rectly thought through be­fore im­ple­men­ta­tion. All aboard for the In­dian fac­tory tour in Za­chod­niopo­morskie?

OUR COVERBryan Fowler’s Sunbeam S7 Deluxe. See fea­ture story on P58.

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