I'm not opposed to private equity. I can't be, or at least I'd be a hypocrite if I were. I have run companies funded by it. But they were genuine entrepreneurial start-ups of the like most capitalists avoid like the plague. So I know it has its use.
Asset stripping is not one of its uses, especially when tax subsidised. So I'm delighted to see enquiries into its tax status and structure being announced here and on the other side of the Atlantic virtually simultaneously.
For those who think business works best when there's a level playing field, and for all those in business who attack complexity in tax that provides unfair competitive advantage to certain participants this should be welcome. Don't expect many business organisations to be singing from the rooftops today then.
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What do you make of the argument that the unlevel playing field was created by Gordon Brown’s pension raid?
Brown’s change to corproation tax rules (which was not a ‘raid on pension funds’) cost pensions maybe £5bn a year – that’s about 10% of contribution value. But that’s irrelevant in contrast to market volatility e.g. post 2000 and the current exuberance.
Put bluntly, it has almost no impact at all.
Those who argue it was significant have clearly not understood the scale of the pension issue.
Richard
You may wish to read this speech – from the horse’s mouth – made by Ed Balls on 8 March, which includes his view on Private Equity and tax deduction of interest. Real pity that the bright things at the Treaury can’t even spell Business in the title.
http://www.hm-treasury.gov.uk/newsroom_and_speeches/press/2007/press_27_07.cfm