Friday, 28 January 2011
A Swedish scandal
And so it happens again. A new Swedish exposé on tax evasion.
During the week, a well-known documentary series has investigated Ingemar Kamprad, the founder of IKEA. Consistently denying over the years that he has any involvement with IKEA any more, it was revealed that he runs a trust in Lichenstein which, in turn, 'owns' the rights to everything IKEA. It was explained that IKEA is run as a kind of franchise system - for every item sold in an IKEA store 3% in 'royalties' go tax free to Ingemar Kamprad's trust. 3% on everything from sofas, to meatballs, to candles. The amount on income has reached something like 100,000,000,000. Now that's a lot of money.
But the documentary focused on how much tax should Ingemar Kamprad pay on this income. He was wildly accused of tax evasion, tax planning and tax manipulation. He was accused of profiting on the Swedish brand and returning nothing to the system.
This is all very interesting from a cultural perspective. What causes scandal in a society says a lot about the norms and values of the country. In the UK, scandal always revolves around sex. In the USA scandal is often related to misuse of power. And in Sweden, it's frequently about money and tax. In a country that sees itself as heavily taxed, it is however deemed scandalous when people don't pay it. It feels like everything from not paying a tv license, to using a government credit card to buy a Toblerone, to tax evasion on a grand scale is given the same room in the media.
What the documentary didn't take up, however, is the fact that since Ingemar Kamprad doesn't live in Sweden and hasn't earned these millions in Sweden, he isn't liable to pay the tax. For example, I live and work in Sweden. I pay my tax in Sweden. Should I also pay tax in the UK, even when I don't live there?
The documentary also forgot to mention the amount of job opportunities that IKEA creates in Sweden. Thousands. And all of those people pay income tax. IKEA pays VAT to the governent, pays employment tax, profit tax and corporate tax. All income to the Swedish government.
If IKEA didn't exist at all, there'd probably be higher unemployment in Sweden. And those of us with jobs would have to pay more tax to support the burgeoning numbers of unemployed.
Now I know it's not all black and white, but it is fun to play with perspectives. One thing's for sure though, Ingemar Kamprad has done more for Sweden and the Swedish brand than any of these state-employed documentary film-makers ever will.