Bankers' tax case omits Paris from global comparison

UK Finance, the lobby group representing major lenders, is facing scrutiny over a new report that excludes Paris from its global tax rankings. The organization, which includes members such as Lloyds, JP Morgan, and Revolut, sent a letter to Chancellor John Healey arguing that the UK capital imposes the highest tax burden on banks worldwide. The group warns that raising rates in next week's budget could trigger a shift of jobs and business to competitor cities.

The data comes from an annual report compiled by the accounting firm PwC. It calculates the total tax liability for a standardized large bank, including corporation tax, social security, VAT, and specific banking levies. The report lists London at a 46.2 percent total tax rate. It places Amsterdam second at 42.2 percent, followed by Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent.

Critics point to the absence of Paris, a major financial rival that hosts investment banks including Goldman Sachs and Barclays. Independent calculations reviewed by a leading accountancy firm estimate that a bank in Paris would face a total tax rate between 51.6 percent and 57.3 percent. This figure is up to 11.1 percentage points higher than the rate calculated for London.

UK Finance explained that it evaluated Paris but could not produce a comparable figure using its specific model bank. The group stated that retaining the same five cities allows for consistent year-on-year comparisons. It also noted that in previous years, cities like Frankfurt showed higher total tax rates than the UK.

Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort a misleading attempt to resist fair taxation. He argued that the data does not reflect the actual taxes paid by Britain's large banks, suggesting their real burden is likely lower than that of international competitors. Nowak emphasized that millions of people struggle to make ends meet while banks distribute billions in profits to shareholders and executives.

Simon Youel, head of policy and advocacy at Positive Money, questioned the methodology. He suggested that Paris was left out to support the claim that the City of London contributes more tax than any other global financial sector. Youel urged the Chancellor to follow other nations in raising bank taxes to recover windfall profits generated by higher interest rates.

The TUC has proposed increasing the bank surcharge from 3 percent to 8 percent, a move it says would generate 2.25 billion pounds per year. Nowak added that the Chancellor has a duty to ask those benefiting from windfall gains to pay a fairer share.

Banking leaders have issued mixed signals. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that a tax rise would be bearable and expressed full support for the Chancellor. In contrast, Jamie Dimon, head of JP Morgan, warned in May that the bank might scrap its plan 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 endanger investment and jobs.

A Treasury spokesperson said tax decisions are for the Chancellor to set out at fiscal events. The department noted that it does not routinely comment on proposals or speculation. PwC has been contacted for comment on the report's methodology.