TJN's director John Christensen has a short letter in the Financial Times today, entitled There's nothing "efficient" about letting others pay more tax
. It rather speaks for itself, and we hope the FT doesn't mind our reproducing it here in full.
Sir, I welcome your analysis of the private equity industry’s tax arrangements (“Private equity leads the way in tax efficiency”, June 18) and I would strongly support calls by UK lawmakers and others to curb these market-distorting indulgences provided to some of our wealthiest citizens.
But your authors and headline writers must banish the term “tax efficiency”. This is an abuse of language. Efficient for whom?
If private equity groups pay less tax, others must pay more, or we must have more potholes and fewer schools, or more government borrowing. Economic inequality, which is politically and economically destabilising, will rise. As you mention, private equity groups typically achieve their tax savings through borrowing, and the Bank of England recently warned in its latest quarterly bulletin that this poses “a risk to the stability of the financial system”.
What on earth is efficient about any of this? Language is tremendously important, and the sooner we can eradicate this poisonous term “tax efficiency”, the better off we will all be.
The article on the private equity industry, linked in the letter, is also well worth reading. Shocking, in fact - at least for those that still have the capacity to be shocked about the private equity industry.