Lobbyists Omit Paris to Argue Against Bank Tax Hikes

A prominent banking lobby group has drawn scrutiny for omitting a major rival city from a report used to argue against higher taxes in the UK.

UK Finance, which represents major institutions including Lloyds, JP Morgan, and Revolut, promoted a study claiming London has the highest tax burden on banks globally. The group warned that increasing rates in the upcoming budget could trigger the relocation of jobs and business to other financial centers.

The annual report, prepared by PwC, calculates the total tax cost for a large bank by combining corporation tax, social security, VAT, and specific banking levies. The data places London's total rate at 46.2 percent. This figure exceeds those in Amsterdam at 42.2 percent, Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent. UK Finance highlighted these numbers in a letter to Chancellor John Healey to support its position.

The exclusion of Paris from the comparison has raised questions, as the city hosts many large investment banks such as JP Morgan, Goldman Sachs, and Barclays. Independent calculations reviewed by a top accountancy firm estimate that a bank in Paris would face a total tax rate between 51.6 and 57.3 percent. This suggests the French capital could be up to 11.1 percentage points more expensive for banks than London.

UK Finance explained that it considered adding Paris but could not produce a comparable figure using its specific model bank. The group stated that maintaining the same five cities allows for consistent tracking over time. It also noted that previous editions of the report showed other jurisdictions, such as Frankfurt, having higher total tax rates than the UK at those times.

Campaigners view the omission as a significant oversight, particularly given the timing ahead of the budget. Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort a misleading attempt to avoid fair taxation. He argued that the data does not reflect the actual taxes paid by major British banks, which he believes are likely lower than those in competitor countries.

Simon Youel, head of policy at Positive Money, questioned the methodology, suggesting Paris was left out to allow UK Finance to claim the City of London contributes more tax than any other global financial sector. Youel expressed hope that the Chancellor would look past the lobbying and follow other nations in raising bank taxes to recover profits gained from higher interest rates.

The TUC has proposed that reversing previous Conservative cuts and raising the bank surcharge from 3 percent to 8 percent would generate 2.25 billion pounds annually. Nowak added that the Chancellor has a duty to ask beneficiaries of windfall profits to contribute more, especially as millions struggle financially while banks distribute billions to shareholders and executives.

Reactions within the banking sector have been divided. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that the financial impact of a tax rise is manageable and expressed full support for the Chancellor. In contrast, Jamie Dimon, head of JP Morgan, warned in May that the bank might scrap plans for a new 3 billion pound London headquarters if the UK became hostile to banks. Dimon met with Andy Burnham and Healey last month to caution that further levies could jeopardize investment and jobs.

A Treasury spokesperson stated that tax decisions are for the Chancellor to detail at fiscal events. The department noted it does not routinely comment on rumors or proposals. PwC has been contacted for comment on the methodology used in the report.