Banking Lobby Excludes Paris From Tax Burden Comparison

UK Finance, the trade body representing major lenders including Lloyds, JP Morgan, and Revolut, has urged the government to resist raising bank taxes ahead of next week's budget. The group relies on a new annual report to argue that London already imposes the highest tax burden on large financial institutions anywhere in the world. The association warns that increasing levies could force banks to relocate jobs and operations to other global centers.

The report, prepared by the accountancy firm PwC, calculates the combined tax obligations for a large bank, including corporation tax, social security, VAT, and specific industry levies. The data places London's total effective tax rate at 46.2 percent. This figure exceeds rates in Amsterdam, which stands 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 highlighting these numbers to support its case against further fiscal pressure.

Critics point to the absence of Paris from the comparison, a city that hosts major investment banks such as Goldman Sachs and Barclays. Independent estimates reviewed by an accounting firm suggest a bank in Paris would face 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 recorded for London. The omission has led opponents to question the completeness of the data presented to the Treasury.

UK Finance explained that it chose to retain the original five cities to ensure consistent comparisons over time. The group stated that it considered adding Paris but could not produce a comparable figure using its specific model bank structure. The association noted that in previous years, jurisdictions like Frankfurt recorded higher total tax rates than the United Kingdom.

Paul Nowak, general secretary of the Trades Union Congress, described the lobbying as a misleading effort to avoid fair taxation. Nowak argued that the current data does not reflect the actual taxes paid by Britain's largest banks, which he believes are likely lower than those paid by competitors. He suggested that reversing previous Conservative cuts and raising the bank surcharge from 3 percent to 8 percent could generate 2.25 billion pounds in annual revenue.

Simon Youel, head of policy at Positive Money, questioned the methodology behind the report. He raised concerns that Paris was excluded to allow the industry to claim London is the highest taxing sector globally. Youel expressed hope that the Chancellor would look beyond the lobbying and increase bank taxes to recoup windfall profits driven by high interest rates.

Reactions from top bank executives remain divided. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that a tax rise would be manageable and that he fully supports the Chancellor. Jamie Dimon, chief executive of JP Morgan, had warned in May that the bank might cancel a 3 billion pound London headquarters plan if the regulatory environment became hostile. Dimon met with Chancellor Healey and Mayor Andy Burnham last month to discuss the risks of further levies.

A Treasury spokesperson said that tax decisions will be set out at upcoming fiscal events and that the department does not routinely comment on proposals. PwC has been contacted for comment on the methodology used in the report.