UK Union debate on tax regimes panics private-equity funds
Union calls for regulation of buyout funds voiced on February 27 had a big impact in the UK, panicking private-equity funds into mobilizing their lobbyists and their political supporters to defend themselves against regulation. Over the past week, a series of editorials, commentaries, interviews and letters in the UK financial press have attempted to defend the funds, with the strongest reaction focused on to union calls to rectify loopholes in the tax regime that favour private-equity's debt-driven buyouts. Private-equity's extreme sensitivity to proposals to close gaps and fix inequalities in the tax regime - an issue also raised by the IUF in its calls for re-regulation - clearly demonstrates that such re-regulation can and will have a significant impact on the leveraged buyouts that are ripping through the manufacturing and services industries, undercutting employment security, undermining union bargaining power and destroying jobs.
In response to the public debate driven by union interventions, private-equity funds sought the political support of Gordon Brown and are even talking about a "voluntary code" to regulate themselves! (See: Private equity promises voluntary code, TELEGRAPH.co.uk March 2 2007)
Examples of private-equity funds' attempt to deflect class for tax regime changes can be found on The Financial Times website FT.com, for example:
UK flags regulatory action for private equity companies, THE FINANCIAL TIMES (March 1 2007)
Clampdown on private equity may yield little, say tax experts, THE FINANCIAL TIMES (March 1 2007)
See also:
Taxing questions about private equity, THE FINANCIAL TIMES (Feb 20 2007)
Unions urge investors to rethink private equity, Reuters (Feb 20 2007)