Paris missing from bank tax data as budget looms

UK Finance, the banking lobby representing firms like Lloyds and JP Morgan, is pressing Chancellor John Healey to hold bank taxes steady ahead of next week’s budget. The group’s annual report claims London imposes the highest tax burden on banks globally at 46.2 percent. Critics say the data leaves out Paris, a major financial rival with a potentially higher rate.

The report, produced by accountancy firm PwC, calculates the total tax load on a large bank, including corporation tax, social security, and VAT. It compares London against four other cities: Amsterdam at 42.2 percent, Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent. The group argues that higher taxes could push banks and jobs to these rival centers.

Paris is absent from the comparison despite hosting major institutions like Goldman Sachs and Barclays. Independent calculations suggest a Paris-based bank faces a tax rate between 51.6 percent and 57.3 percent. That is up to 11.1 percentage points higher than the London figure cited by UK Finance.

UK Finance said it considered Paris but could not generate a comparable figure using its specific model bank. The group stated that keeping the same five cities allows for consistent year-over-year tracking. It noted that previous reports showed other jurisdictions, such as Frankfurt, with higher rates than the UK at different times.

Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort misleading. He argued the data does not reflect the actual taxes paid by British banks, which he believes are lower than those of competitors. Nowak proposed raising the bank surcharge from 3 percent to 8 percent, a move the TUC says could generate 2.25 billion pounds annually.

Simon Youel of Positive Money questioned whether Paris was intentionally excluded to support the claim that the City contributes more tax than other sectors. He urged the Chancellor to raise bank taxes to capture windfall profits from high interest rates. Youel expressed hope that Healey would follow other nations in increasing levies.

Reactions from top bankers have varied. CS Venkatakrishnan, chief executive of Barclays, said on Thursday that a tax rise would be bearable and voiced support for the Chancellor. Jamie Dimon, head of JP Morgan, warned in May that the bank might cancel plans for a 3 billion pound London headquarters if Britain becomes hostile to banks. Dimon met with Healey last month to warn that further levies could jeopardize investment and jobs.