Paris missing from bank tax data

A letter sent to Chancellor John Healey this week argues that raising taxes in the upcoming budget will push banks out of London. The document, authored by UK Finance, relies on a report stating that the capital carries the heaviest tax load of any global financial hub.

The report, prepared by PwC, calculates a total tax rate of 46.2 percent for a large bank operating in London. This figure includes corporation tax, social security contributions, VAT, and specific banking levies. UK Finance, which represents Lloyds, JP Morgan, and Revolut, compares this rate to lower burdens in Amsterdam, Frankfurt, Dublin, and New York. The group warns that higher costs could force firms to shift jobs and business to other cities.

Paris is absent from this list of five cities. Independent calculations reviewed by an accountancy firm place the total tax rate for a bank in Paris between 51.6 percent and 57.3 percent. That range sits up to 11.1 percentage points above the London figure. Paris hosts major lenders including JP Morgan, Goldman Sachs, and Barclays, making it a direct competitor for banking operations.

UK Finance explained that it excluded Paris because it could not generate a comparable figure using its specific model bank. The group stated that maintaining the same five cities ensures consistent year-over-year data. It noted that previous reports showed different rankings, such as Frankfurt having higher rates than the UK in earlier years.

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 many competitors. Nowak said the omission is notable as banks seek to protect profits ahead of the budget.

Simon Youel, head of policy at Positive Money, questioned whether Paris was left out to support the claim that the City contributes more tax than any other sector. Youel expressed hope that Healey would follow other countries in raising bank taxes to recoup profits generated by higher interest rates.

The TUC proposes increasing the bank surcharge from 3 percent to 8 percent. Nowak stated this change could raise 2.25 billion pounds annually. He added that those benefiting from windfall profits should pay a fairer share while millions struggle with costs of living.

Banking leaders have sent mixed signals. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that a tax rise is bearable. In contrast, Jamie Dimon, head of JP Morgan, warned in May that the bank could scrap a 3 billion pound London headquarters if the environment becomes hostile. Dimon met with Healey last month to discuss the risk to investment. A Treasury spokesperson said tax decisions are for the Chancellor to announce at fiscal events. PwC has been contacted for comment on the methodology.

The budget is due next week. The report remains the central document in UK Finance’s case against a tax increase.