London banks argue tax burden is highest in world, leaving Paris out of data

UK Finance, the industry body representing major lenders including Lloyds, JP Morgan, and Revolut, is arguing that London carries the heaviest tax load of any global financial center. The group aims to persuade Chancellor John Healey to avoid raising taxes in next week's budget. A letter sent to the Chancellor emphasized that increasing costs could prompt banks to shift business and employment to rival cities.

The lobby group relies on an annual report prepared by PwC. This document calculates the combined effect of corporation tax, social security contributions, VAT, and specific banking levies on a standard large institution. The data places the total tax rate in London at 46.2 percent. This figure exceeds the rates in Amsterdam at 42.2 percent, Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent.

Critics point out that the report excludes Paris, a primary competitor for London. Major investment banks such as Goldman Sachs and Barclays operate significant offices in the French capital. Independent calculations reviewed by a top accountancy firm indicate that a bank in Paris would face a total tax rate between 51.6 percent and 57.3 percent. This places the Parisian burden up to 11.1 percentage points above the London figure.

UK Finance explained that it could not produce a comparable figure for Paris using its specific model bank. The group stated that retaining the current five cities allows for consistent tracking over time. It also noted that in previous years, cities 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 match the actual taxes paid by large British banks. Nowak suggested that reversing previous Conservative cuts and raising the bank surcharge from 3 percent to 8 percent would generate 2.25 billion pounds annually. He contended that the Chancellor should ask banks to contribute more given their windfall profits.

Simon Youel, head of policy at Positive Money, questioned the methodology. He asked whether Paris was deliberately omitted to help the lobby group claim the City contributes more tax than other financial sectors. Youel expressed hope that the Chancellor would recognize the lobbying and follow other nations in increasing bank taxes.

Banking leaders have offered mixed views on the issue. CS Venkatakrishnan, chief executive of Barclays, told reporters on Thursday that the industry could absorb a tax increase and supported the Chancellor. Jamie Dimon, head of JP Morgan, warned in May that a hostile environment could lead the bank to scrap its 3 billion pound London headquarters project. Dimon met with government officials last month to warn that further levies risked investment and jobs. A Treasury spokesperson said tax decisions belong to the Chancellor, and PwC has been contacted for comment.