UK Finance Omit Paris From Tax Report As Budget Looms

UK Finance is facing scrutiny for leaving Paris out of a global tax comparison just days before the UK budget. The banking lobby, which counts Lloyds, JP Morgan, and Revolut among its members, argues that London imposes the heaviest tax load on banks in the world. They warn that raising rates now could push firms and jobs to rival cities.

The group relies on an annual report from PwC to support this claim. The study calculates the total tax cost for a large bank, including corporation tax, social security, VAT, and bank levies. It places London at a 46.2 percent total rate. This figure exceeds 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 numbers to Chancellor John Healey in a letter urging caution.

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

UK Finance says it considered Paris but could not create a like-for-like figure using its specific model bank. The group maintains that comparing the same five cities ensures consistency over time. It notes that in previous years, Frankfurt’s total tax rate was higher than the UK’s.

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. Nowak believes those rates are likely lower than those of many competitors.

Simon Youel, head of policy at Positive Money, questioned the methodology. He asked whether Paris was left out to help UK Finance claim the City contributes more tax than any other financial sector. Youel hopes the Chancellor will raise bank taxes to recoup profits generated by higher interest rates.

The TUC proposes increasing the bank surcharge from 3 percent to 8 percent. Nowak says this move, along with reversing Conservative cuts, could raise 2.25 billion pounds per year. He argues that those benefiting from windfall profits should pay a fairer share while millions struggle to make ends meet.

Reactions from banking leaders are mixed. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that a tax rise is bearable and backed the Chancellor. Jamie Dimon, head of JP Morgan, warned in May that the bank might scrap plans for a new 3 billion pound London headquarters if Britain becomes 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. PwC has been contacted for comment on its methodology.