What’s so exciting about another foreign store?
The hype was palpable. The promises were huge. The reality is far less exciting. It was like all our homeware Christmases had come at once. Carollers might as well have roamed the streets, singing: ‘‘You better not shout, you better not cry, you better not pout, I’m telling you why . . . I-k-e-a is coming to town! ‘‘
The Swedish/Dutch/tax haven-centred furniture store is ‘‘finally coming to New Zealand’’. How great. Had there been carollers, then at least the live news coverage bringing us the latest about its impending arrival would have had something to talk about.
NZ Herald columnist Paul Little told us how he furnished his entire house with Ikea. Readers of Homed were asked to say what they were ‘‘most excited about’’. Guardian UK journalist Elle Hunt congratulated New Zealand for ‘‘your impending Ikea’’. There was even a story reviewing what looked like fairly average goodie bags from the press briefing.
This whole Ikea thing was just so exciting. Where would it go? What would it have? Would there be meatballs? Why does everyone keep talking about meatballs?
All this talk, over what was a fairly insignificant press conference. Ikea chief Jesper Brodin revealed very little when he arrived. The company had already indicated its intention to set up shop in New Zealand. Its press briefing reiterated that wish, and confirmed there would be meatballs. ‘‘Cheap meatballs’’, as food critic Ewan Sargent said, are hardly front-page news.
We do not know when Ikea will arrive. It did not tell us. And we do not know if the multinational will pay its fair share of tax, when it arrives.
Ikea, you mightn’t have known, is actually a ‘‘charity’’, and so pays less tax than a normal, greedy, multinational company. That lower tax rate is supposed to be in recognition of their good deeds, which is fine.
But what good tidings will Ikea’s arrival bring for New Zealand? They bring with them cheap furniture, shipped from the other side of the world. They bring traffic jams, as people drive out to their out-of-town mega-stores. They bring significant environmental problems, selling easily disposable, easily breakable, furniture. They bring, most likely, job losses from local businesses who pay their fair share of tax.
Ikea is a ‘‘charity’’ that has been exposed for funnelling cash out of higher-tax regions into its matrix of companies that are often based in low-tax jurisdictions. In Australia, it is understood to have made more than $1 billion in sales in 2017. Yet, for those sales, it paid just $289,000 in tax.
In a decade of operating across the ditch, it made $1b in profit. Those profits, the Australian Financial Review discovered, were sent tax-free to Luxembourg and the Netherlands.
This kind of tax-avoidance strategy, however legal, seems hardly charitable. It’s the kind of behaviour that leaves me less than excited for the arrival of Ikea. There’s nothing exciting about another multinational undercutting local businesses because it can afford to dodge taxes.
Ikea won’t be able to dodge all its taxes in New Zealand. And, as noted by Stuff’s Bonnie Flaws, new tax laws should make it easier for IRD to chase down multinationals. The laws are allowing more information-sharing between tax jurisdictions, and should help enforce the spirit, rather than letter, of the law.
Ikea’s announced arrival carries on our long tradition of bandwagon jumping. I suspect most of us don’t care one bit about the homeware manufacturer, and yet news of its expansion was – for the most part – blindly celebrated.
WThese foreign megacompanies jet into places like New Zealand to effortlessly scoop up more profits for their offshore accounts. It’s all just hype.
e do the same when Apple announces a new iPhone, or Netflix releases another formulaic trashy show. The way we talk about Uber, it’s as if this foreign app is our friend. We ‘‘Uber’’ places rather than taxiing or using a locally-owned app, such as Zoomy. There’s no difference between Uber and Zoomy and, unless you have a mansion to fill with flat-pack rubbish, I doubt you’ll notice a difference between Kmart and Ikea’s offerings.
These foreign mega-companies jet into places like New Zealand to effortlessly scoop up more profits for their offshore accounts.
It’s all just hype. Meaningless hype, ignited because we spend way too much time watching American TV and Instagram celebrities.
These companies have brand recognition before they even reach us. As soon as someone like Brodin says our name, this country’s ‘‘little islands’’ complex is sent into overdrive.
But again, I ask, what exactly is there to be excited about? My house certainly doesn’t need an ottoman.