Missing Paris data casts doubt on bank lobby's tax argument

UK Finance is under scrutiny after an annual report omitted Paris from a global tax comparison, a gap that may weaken the group's argument against higher taxes in next week's budget. The lobby, which represents major lenders including Lloyds, JP Morgan, and Revolut, contends that London already carries the highest tax load among financial centers. This claim is central to its effort to persuade Chancellor John Healey to maintain the status quo.

The report, prepared by PwC, calculates the total tax burden on a standardized large bank, incorporating corporation tax, social security, VAT, and sector-specific levies. It places London's total rate at 46.2 percent. This figure exceeds the rates in Amsterdam, which is 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 the Chancellor citing these numbers to support its position.

Critics point out that Paris, a key rival that hosts JP Morgan, Goldman Sachs, and Barclays, was left out of the analysis. Independent calculations reviewed by an accountancy firm indicate that a bank operating in Paris faces 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 in London.

UK Finance explained that it excluded Paris because it could not generate a consistent 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, jurisdictions like Frankfurt recorded higher total tax rates than the UK.

Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort misleading. He argued that the data does not reflect the actual taxes paid by major British banks, which he believes are lower than those of competitors. The TUC has proposed increasing the bank surcharge from 3 percent to 8 percent, a move it estimates would raise 2.25 billion pounds annually.

Reactions from bank leaders remain divided. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that a tax rise is manageable and expressed support for the Chancellor. Jamie Dimon of JP Morgan warned in May that the bank might cancel plans for a new 3 billion pound London headquarters if the political climate turns hostile. Dimon met with Healey last month to discuss the potential impact of further levies on investment and jobs.

A Treasury spokesperson said that tax decisions are for the Chancellor to announce at fiscal events and that the department does not routinely comment on proposals. PwC has been contacted for comment on the report's methodology.