Brown says he’ll end private equity loopholes

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The Guardian has reported that:

Gordon Brown yesterday announced that he will close some of the tax loopholes enjoyed by private equity companies in the pre-budget report due to be published next month on the same day as the comprehensive spending review.

It also notes he said that:

Private equity will be dealt within the PBR. I can assure you that we will do so.

and

That matter will be looked at in a few days and weeks and wherever there is a loophole that there should not be, we will take action. I may say that since 1997 we have closed a massive number of loopholes where they exist. Sometimes it is very difficult to do so because there are lawyers and accountants who are always trying to find loopholes. On this issue of private equity, I can assure you that we will do so.

I hope he means it. Really means it. But I have my doubts. As the Telegraph noted:

[H]e declined to answer a question over whether the non-domicile tax rules would also be overhauled

That's the worrying bit. Unless you make the carried interest in private equity funds subject to income tax then leaving the domicile rule intact would mean that whatever is done to Capital Gains Tax rules 80% of all those who benefit from owning those carried interests will still do so effectively tax free as they are non-domiciled and so can record their capital gains offshore. This is not a question of either / or. It's a matter of both or no benefit.

That's why I have my doubts.

But I'll agree with him on one thing: lawyers and accountants who are always trying to find loopholes.

And if I was Alistair Dailing I'd be worried about something else. Whenever did Tony Blair announce tax policy? But I note Gordon Brown still is.