Paris omitted from London bank tax data as budget nears

Paris is missing from the global tax comparison that UK Finance sent to Chancellor John Healey ahead of next week's budget. The banking lobby group relies on a report showing London has the highest total tax burden among five major cities. Independent calculations suggest the exclusion distorts the picture by leaving out a key rival where the tax rate is substantially higher.

The annual report, prepared by PwC, calculates the total tax burden on a large bank including corporation tax, social security, VAT, and bank levies. It places London's total rate at 46.2 percent. That 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. UK Finance used these numbers in a letter to Healey to argue that tax increases could drive banks to relocate business and jobs.

Independent estimates reviewed by a major 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 London figure. Paris hosts numerous large investment banks, including JP Morgan, Goldman Sachs, and Barclays, making it a central competitor for the City of London.

UK Finance said it considered adding Paris to the list but could not produce a comparable figure using its specific model bank. The group maintained that using the same five cities allows for consistent comparison over time. It noted that earlier editions of the report showed jurisdictions like Frankfurt with higher total tax rates than the UK at various points.

Critics question the timing and methodology of the report. Paul Nowak, general secretary of the Trades Union Congress, called the lobbying effort a misleading attempt to block fair taxes. He argued that the data does not reflect the actual taxes paid by Britain's big banks, which he believes are lower than those of many competitors. Simon Youel, head of policy at Positive Money, asked whether Paris was cynically left out to support the claim that the City contributes more tax than any other global financial sector.

The TUC proposes that reversing previous Conservative cuts and raising the bank surcharge from 3 percent to 8 percent would generate 2.25 billion pounds per year. Nowak stated that the Chancellor has a duty to ask those benefiting from windfall profits to pay a fairer share, especially as millions struggle to make ends meet while banks distribute billions to shareholders and executives.

Banking leaders have offered mixed reactions to potential changes. CS Venkatakrishnan, chief executive of Barclays, said the financial impact of a tax rise would be bearable and expressed full support for the Chancellor. 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 jeopardize investment and jobs. A Treasury spokesperson said decisions on tax are for the Chancellor to set out at fiscal events, and PwC has been contacted for comment on the methodology.