UK banking lobby leaves Paris out of tax report before budget

A major UK banking lobby group is facing scrutiny over a tax report that excludes Paris from a global comparison, days before the government announces its budget. UK Finance, which represents major institutions including Lloyds, JP Morgan, and Revolut, used the data to argue that London already imposes the heaviest tax burden on banks in the world. The group warns that increasing taxes could force financial firms to move operations and jobs to other cities.

The data comes from an annual report compiled by the accountancy firm PwC. It calculates the total tax cost for a large bank, combining corporation tax, social security, VAT, and specific industry levies. The report states that London has a total tax rate of 46.2 percent. This figure is higher than 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 to support its case against new taxes.

Critics have focused on the absence of Paris, a major financial rival that hosts large banks such as Goldman Sachs and Barclays. Independent calculations reviewed by an accountancy firm suggest a bank in Paris faces a total tax rate 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 the French capital but could not produce a comparable figure using its specific model bank. The group argued that keeping the same five cities allows for consistent comparisons over time.

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 British banks, which he believes are lower than those of many competitors. Simon Youel, head of policy at the campaign group Positive Money, questioned whether Paris was left out to support the claim that the City contributes more tax than other global financial sectors. Youel said the Chancellor should follow other countries in raising bank taxes to recover windfall profits from higher interest rates.

The TUC has proposed increasing the bank surcharge from 3 percent to 8 percent. Nowak said this change could raise 2.25 billion pounds per year. He added that the Chancellor has a responsibility to ask banks benefiting from windfall profits to pay a fairer share, especially while millions of people struggle to make ends meet.

Reactions from banking leaders have been divided. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that the financial impact of 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 to banks. 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 decisions on tax are for the Chancellor to set out at fiscal events. The department noted that it does not routinely comment on rumors or proposals. PwC has been contacted for comment on the methodology used in the report.