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TUC challenges ministers on private equity
The TUC is calling on the Government to introduce a comprehensive set of measures to deal with threats to the economy and workforce from the growth of private equity funded takeovers.
The growth of private equity has wider economic implications, the TUC says. There needs to be an investigation of whether the growth of highly leveraged buy-outs is building up a
The rise of private equity is reducing the size of the stock market, the submission says, as private equity takeovers have risen from 9 per cent of all deals to 25 per cent in nine years, with UK equity market capitalisation falling by nearly £50 billion in the first half of last year. This could result in a dangerous reduction in the liquidity of capital, the report warns.
This reduces investment opportunities open to pension funds and other investors, and means that an increasing proportion of the wealth generated by UK companies is not available to pay pensions either today or in the future. Instead profits are going into the pockets of a handful of super-rich private equity partners who receive specially favourable tax treatment.
The TUC says the Government should close the tax loophole that exempts private equity firms from rules that require employees to declare shares received as part of their pay package as income. 'Treating carried interest as capital gains rather than income for tax purposes is an anomaly that is extremely unfair to the very many people on far lower incomes who pay much higher levels of tax', the report says.
Tagged as: private equity
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