Bank Lobby Letter Leaves Paris Out of Tax Comparison

UK Finance is urging the government to keep bank taxes low ahead of next week’s budget.

The lobby group, which represents Lloyds, JP Morgan, and Revolut, sent a letter to Chancellor John Healey. It relies on a report claiming London is the most tax-heavy financial center in the world.

The report was compiled by PwC. It calculates the total tax burden on a large bank. This includes corporation tax, social security, VAT, and bank levies. The data shows a total rate of 46.2 percent for London.

The group compared this rate to other major cities. Amsterdam sits at 42.2 percent. Frankfurt is at 39.1 percent. Dublin stands at 29 percent. New York is at 27.9 percent. UK Finance warns that raising taxes could push banks to move jobs and business to these rivals.

Paris is missing from that list. The city is a major rival to London and hosts large investment banks, including Goldman Sachs and Barclays. Independent calculations suggest a bank in Paris would face a total tax rate between 51.6 percent and 57.3 percent.

That range is up to 11.1 percentage points higher than the rate in London. UK Finance said it considered including Paris but could not generate a like-for-like figure using its model bank. The group stated that keeping the same five cities allows for consistent comparisons over time.

Critics argue the omission helps banks protect profits. Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort misleading. He said the data does not reflect the actual taxes paid by Britain’s big banks. He believes those rates are likely lower than those of many competitors.

Simon Youel, head of policy at Positive Money, questioned the methodology. He asked if Paris was left out to allow UK Finance to claim the City contributes more tax than any other global sector. Youel said the Chancellor should raise bank taxes to recoup windfall profits from higher interest rates.

The TUC proposed increasing the bank surcharge from 3 percent to 8 percent. That change could raise 2.25 billion pounds per year. Nowak said the Chancellor has a duty to ask those benefiting from windfall profits to pay a fairer share. He noted that millions of people struggle to make ends meet while banks pay billions to shareholders.

Banking leaders have offered mixed reactions. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that a tax rise 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 stated it does not routinely comment on rumors or proposals. PwC has been contacted for comment regarding the report's methodology.