London banks claim global tax lead, but Paris figures missing

UK Finance is telling the government that London carries the heaviest tax load of any major financial center. The lobby group, which represents firms including Lloyds, JP Morgan, and Revolut, relies on a new report to support its case. The document claims a total tax rate of 46.2 percent for large banks operating in the capital. This figure is set against a warning that higher levies could push jobs and business to rival cities.

The data comes from an annual study compiled by the accountancy firm PwC. It aggregates corporation tax, social security contributions, VAT, and specific banking charges. In the comparison, London’s 46.2 percent rate exceeds Amsterdam at 42.2 percent and Frankfurt at 39.1 percent. Dublin and New York appear lower in the ranking, with rates of 29 percent and 27.9 percent respectively. UK Finance sent a letter to Chancellor John Healey to underscore these numbers before next week’s budget announcement.

Paris is absent from the list of five cities analyzed. This omission has drawn scrutiny because the French capital hosts major lenders such as Goldman Sachs and Barclays. Independent calculations reviewed by a leading accountancy firm estimate that a bank in Paris would face a total tax rate between 51.6 percent and 57.3 percent. This range places the Parisian burden up to 11.1 percentage points above the rate in London.

UK Finance explained that it tried to include Paris but could not produce a comparable figure using its standard model. The group said it kept the same five cities to maintain consistency across years. It noted that previous reports showed other jurisdictions, such as Frankfurt, with higher total rates than the UK at that time. The lobby argues this consistency allows for clear year-on-year tracking.

Critics say the exclusion of Paris changes the narrative of the report. Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort a misleading attempt to resist fair taxation. He argued that the data does not reflect the actual taxes paid by British banks, which he believes are likely lower than those of many competitors. Nowak added that the Chancellor has a duty to ask those benefiting from windfall profits to pay a fairer share.

Simon Youel, head of policy at the campaign group Positive Money, questioned the methodology directly. He asked whether Paris was left out to allow UK Finance to claim the City contributes more tax than any other global sector. Youel expressed hope that the Chancellor would follow other nations in raising bank taxes to recoup profits generated by higher interest rates. His comments suggest a view that the current lobbying may be shaping policy based on selective data.

The TUC has proposed specific changes to the tax code. Reversing previous Conservative cuts and raising the bank surcharge from 3 percent to 8 percent would raise 2.25 billion pounds per year, the union calculated. Nowak emphasized that millions of people struggle to make ends meet while banks distribute billions to shareholders and executives. He framed the budget decision as a question of fairness for the wider economy.

Banking leaders have offered mixed reactions to the tax debate. 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, the head of JP Morgan, took a different stance in May. He warned 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 noted that it does not routinely comment on rumors, speculation, or proposals. PwC has been contacted for comment regarding the methodology used in the report.