Bankers omit Paris data to claim London has highest tax burden

UK Finance has excluded Paris from its latest tax comparison to argue that London bears the highest tax burden among major financial hubs. The lobbying group represents major institutions including Lloyds, JP Morgan, and Revolut. It warns that a tax increase in next week's budget could drive business and jobs away from the capital.

The annual report, prepared by PwC, calculates the total tax cost for a large bank. It aggregates corporation tax, social security, VAT, and specific bank levies. The data places London's total rate at 46.2 percent. This exceeds rates in Amsterdam at 42.2 percent, Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent. UK Finance sent these figures to Chancellor John Healey in a letter urging against new taxes.

Critics point out that Paris, a major rival hosting JP Morgan, Goldman Sachs, and Barclays, is missing from the list. Independent calculations reviewed by an accountancy firm estimate a Parisian bank faces a total tax rate between 51.6 percent and 57.3 percent. That range is up to 11.1 percentage points higher than the rate in London.

UK Finance said it considered adding Paris but could not create a comparable figure using its specific model bank. The group argued that maintaining the same five cities allows for consistent year over year comparisons. It noted that previous reports showed jurisdictions like Frankfurt having higher total tax rates than the UK at different times.

Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort misleading. He stated that the data does not reflect the actual taxes paid by Britain's big banks. Nowak believes those taxes are likely lower than those of many competitors. He described the push as an attempt to argue against fair taxes while banks protect profits.

Simon Youel, head of policy at Positive Money, questioned the methodology. He asked whether Paris was left out to allow UK Finance to claim the City contributes more tax than any other global financial sector. Youel hopes the Chancellor will follow other countries in raising bank taxes to recoup windfall profits from higher interest rates.

The TUC proposes increasing the bank surcharge from 3 percent to 8 percent to raise 2.25 billion pounds per year. Nowak said the Chancellor must ask those benefiting from windfall profits to pay a fairer share. He noted that millions of people struggle to make ends meet while banks pay out billions to shareholders and executives.

Banking leaders have offered mixed reactions. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that a tax rise would be bearable. He gave the Chancellor his full support. In contrast, Jamie Dimon, head of JP Morgan, warned in May that the bank could scrap plans for a new 3 billion pound London headquarters if Britain became hostile. Dimon met with Andy Burnham and Healey last month to warn that further levies could put investment and jobs at risk. A Treasury spokesperson said tax decisions are for the Chancellor to set out at fiscal events. PwC has been contacted for comment on the report's methodology.