Paris left out of bank tax report

The banking lobby group UK Finance left Paris out of its latest tax comparison, a move that weakens its argument that London carries the world's heaviest tax load. The organization, which represents institutions including Lloyds, JP Morgan, and Revolut, released an annual report stating that London imposes a total tax rate of 46.2% on large banks. This figure exceeds rates in Amsterdam at 42.2%, Frankfurt at 39.1%, Dublin at 29%, and New York at 27.9%. The group sent these figures to Chancellor John Healey in a letter urging him to hold back on tax increases in next week's budget.

The report, compiled by accountancy firm PwC, calculates the total tax burden on a specific model bank. It includes corporation tax, social security, VAT, and bank levies. However, independent calculations reviewed by a leading accountancy firm indicate that a similar bank in Paris would face a tax rate between 51.6% and 57.3%. This means the French capital imposes a burden up to 11.1 percentage points higher than London.

UK Finance explained that it considered adding Paris but could not generate a comparable figure using its specific model bank. The group argued that keeping the same five cities allows for consistent year over year comparison. It noted that previous editions of the report showed other jurisdictions like Frankfurt having higher rates than the UK at that time. The lobby warned that raising taxes now could cause banks to move business and jobs to rival financial centers.

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 Britain's big banks, which he believes are likely lower than those of many competitors. The TUC has proposed raising the bank surcharge from 3% to 8% to reverse previous Conservative cuts. Nowak said this change could raise 2.25 billion pounds per year. He argued that the Chancellor must ask those benefiting from windfall profits to pay a fairer share while millions of people struggle to make ends meet.

Simon Youel, head of policy and advocacy at Positive Money, questioned the report's methodology. He asked whether Paris was cynically left out to allow the lobby to claim the City contributes more tax than any other global financial sector. Youel expressed hope that the Chancellor would follow other countries in raising bank taxes to recoup profits generated by higher interest rates.

Banking leaders have offered mixed reactions to the potential tax rise. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that the financial impact would be bearable. He gave the Chancellor his full support. Jamie Dimon, head of JP Morgan, warned in May that the bank could scrap plans for a new 3 billion pound London headquarters if Britain became 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 a matter for the Chancellor to set out at fiscal events. The department noted that it does not routinely comment on rumors or speculation. PwC has been contacted for comment regarding the methodology used in the report.