Bank lobby omits Paris from global tax burden data

UK Finance, the lobbying group representing major financial institutions, has excluded Paris from its annual comparison of global tax burdens. This omission appears to favor the group's argument that London is the most expensive city in the world for banks to operate. The data supports a push to prevent tax increases in the UK budget scheduled for next week.

The report was compiled by PwC and calculates the total tax load on a hypothetical large bank. It aggregates corporation tax, social security contributions, VAT, and specific bank levies. According to the figures, London imposes a total tax rate of 46.2 percent. This rate exceeds those in Amsterdam at 42.2 percent, Frankfurt at 39.1 percent, Dublin at 29 percent, and New York at 27.9 percent. UK Finance sent a letter to Chancellor John Healey highlighting these numbers to support its case against higher taxes.

Independent calculations suggest the picture changes when Paris is included. Estimates 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 in London. Paris hosts major investment banks, including JP Morgan, Goldman Sachs, and Barclays, making it a direct rival to the City of London.

UK Finance stated that it could not generate a consistent figure for Paris using its specific model bank. The group argued that keeping the same five cities allows for a fair comparison over time. It noted that in previous years, jurisdictions like Frankfurt had higher total tax rates than the UK.

Critics argue the exclusion is strategic. Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort misleading. He stated that the data does not reflect the actual taxes paid by Britain's big banks, which he believes are likely lower than those of many competitors. The TUC has proposed increasing the bank surcharge from 3 percent to 8 percent. This change would raise 2.25 billion pounds per year.

Simon Youel, head of policy at Positive Money, questioned the methodology. He asked 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 countries in raising bank taxes to recoup windfall profits generated by higher interest rates.

Reactions from banking leaders have been mixed. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that the financial impact of a tax rise would be bearable. He gave the Chancellor his full support. In contrast, Jamie Dimon, the 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 stated that 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 or proposals. PwC has been contacted for comment regarding the methodology used in the report.