Bank group leaves Paris out of tax data before budget

UK Finance, the lobby group for major UK banks, submitted a report to the Chancellor this week that lists London as the most tax intensive city in the world. The group represents institutions including Lloyds, JP Morgan, and Revolut. It argues that raising taxes in next week's budget will drive banks and jobs to rival financial centers. The data used in the report was compiled by PwC.

The report calculates the total tax burden on a large bank. This includes corporation tax, social security, VAT, and specific bank levies. The figures show London imposes a total tax rate of 46.2 percent. This is higher than Amsterdam at 42.2 percent, Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent. UK Finance sent a letter to Chancellor John Healey citing these numbers.

Critics note that Paris is missing from this list of five cities. Paris hosts major investment banks such as JP Morgan, Goldman Sachs, and Barclays. Independent calculations reviewed by an accountancy firm place the total tax rate in Paris between 51.6 percent and 57.3 percent. This range is up to 11.1 percentage points higher than the rate in London.

UK Finance said it considered including Paris in the analysis. However, the group stated it could not generate a comparable figure using its specific model bank. The lobby group argued that keeping the same five cities allows for consistent comparison over time. It noted that previous editions of the report showed jurisdictions like Frankfurt having higher total tax rates than the UK.

Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort misleading. He stated the data does not reflect the actual taxes paid by Britain's big banks. Nowak believes these banks likely pay lower rates than many competitors. He argued the TUC proposal to increase the bank surcharge from 3 percent to 8 percent could raise 2.25 billion pounds per year.

Simon Youel, head of policy at Positive Money, questioned the methodology. He asked whether Paris was left out to support the claim that the City contributes more tax than any other global financial sector. Youel expressed hope that the Chancellor would raise bank taxes to recoup windfall profits from higher interest rates.

Banking leaders have offered mixed reactions to the prospect of higher taxes. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that the financial impact 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 to banks. Dimon met with Andy Burnham and Healey last month to discuss how further levies could affect investment and jobs. A Treasury spokesperson said decisions on tax are for the Chancellor to set out at fiscal events. PwC has been contacted for comment on the methodology used in the report.