UK banking lobby questioned over missing Paris tax data

The United Kingdom’s finance sector is engaged in a high-stakes lobbying effort ahead of next week’s budget, with a central debate focused on the accuracy of global tax comparisons. UK Finance, the industry body representing major lenders including Lloyds, JP Morgan, and Revolut, has urged Chancellor John Healey to avoid raising bank taxes. The group contends that London currently imposes the heaviest tax burden on banks worldwide. This claim is based on a report that calculates a total tax rate of 46.2 percent for a large bank operating in the capital.

The figures come from an annual study compiled by the accountancy firm PwC. The model aggregates corporation tax, social security contributions, value-added tax, and specific banking levies. UK Finance sent a letter to the Chancellor highlighting these numbers to argue that further increases would drive business and jobs to rival financial hubs. The report compares London with four other major cities: Amsterdam at 42.2 percent, Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent.

Scrutiny has intensified over the absence of Paris from this list. Paris is a direct competitor to London and hosts major investment banks such as JP Morgan, Goldman Sachs, and Barclays. Independent calculations reviewed by a leading accountancy firm indicate that a bank in Paris faces a total tax rate between 51.6 percent and 57.3 percent. This range is up to 11.1 percentage points higher than the rate cited for London, contradicting the lobby’s central premise.

UK Finance stated that it considered including Paris but could not generate a comparable figure using its specific model bank. The group argued that retaining the same five cities ensures consistency for tracking changes over time. It noted that in previous years, jurisdictions like Frankfurt had higher total tax rates than the UK, suggesting the rankings are fluid.

Paul Nowak, general secretary of the Trades Union Congress, criticized the lobbying effort as a misleading attempt to protect profits. He argued that the data does not reflect the actual taxes paid by Britain's large banks, which he believes are likely lower than those of many competitors. Nowak proposed that increasing the bank surcharge from 3 percent to 8 percent could raise 2.25 billion pounds per year, a move that would reverse previous Conservative cuts.

Simon Youel, head of policy at Positive Money, raised concerns about the methodology. He questioned whether Paris was left out to allow UK Finance to claim the City contributes more tax than any other global financial sector. Youel expressed hope that the Chancellor would follow other nations in raising bank taxes to recoup windfall profits generated by higher interest rates.

Reactions from banking leaders have been divided. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that a tax rise would be bearable and gave the Chancellor his full support. In contrast, 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 responded by stating that tax decisions are for the Chancellor to set out at fiscal events. The department noted that it does not routinely comment on rumors or proposals. PwC has been contacted for comment regarding the methodology used in the report.