Bank Lobby Data Excludes Paris From London Tax Comparison

Banking executives face a choice next week as the UK government prepares its budget. Lobbyists are urging Chancellor John Healey to avoid raising bank taxes to protect jobs in London. The argument rests on data suggesting London imposes the highest tax burden on major banks globally. Critics say the data leaves out a major rival, Paris.

UK Finance, a group representing lenders including Lloyds, JP Morgan, and Revolut, promoted a report compiled by PwC. The document calculates total tax rates on a model bank, including corporation tax, social security, and VAT. It places London's rate at 46.2 percent. That figure exceeds Amsterdam at 42.2 percent, Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent. The group sent these figures to the Treasury to support its case against a tax increase.

Independent calculations indicate Paris is missing from the comparison. A bank operating in the French capital would face a total tax rate between 51.6 percent and 57.3 percent. This is up to 11.1 percentage points higher than the rate in London. Paris hosts major institutions such as Goldman Sachs and Barclays.

UK Finance said it considered adding Paris but could not produce a comparable figure using its specific model. The group stated that keeping the same five cities allows for consistent tracking over time. It noted that previous reports showed other jurisdictions, such as Frankfurt, having higher rates than the UK in earlier years.

Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort misleading. He argued the data does not reflect actual taxes paid by British banks, which he believes are likely lower than competitors. Nowak proposed increasing the bank surcharge from 3 percent to 8 percent. He said this change could raise 2.25 billion pounds per year.

Simon Youel, head of policy at Positive Money, questioned the methodology. He asked whether Paris was excluded to help the lobby claim the City contributes more tax than other global financial sectors. He urged the Chancellor to raise bank taxes to recoup windfall profits from high interest rates.

Bank leaders have given mixed signals. CS Venkatakrishnan, chief executive of Barclays, told reporters on Thursday that a tax rise would be bearable. Jamie Dimon, head of JP Morgan, warned in May that the bank might scrap a 3 billion pound London headquarters if Britain became hostile to banks. Dimon met with Healey and Mayor Andy Burnham last month to warn that further levies risk investment. A Treasury spokesperson said tax decisions are for the Chancellor to set out at fiscal events.