Bankers omit Paris from tax data as UK budget approaches

Workers in the financial sector face a potential shift in their working environment as UK Finance prepares a case for the Chancellor. The group, which includes Lloyds, JP Morgan, and Revolut, contends that raising taxes in next week's budget will force institutions to relocate jobs and business to other cities. This argument relies on a claim that London carries the heaviest tax load of any major global financial hub.

The evidence for this claim comes from an annual report produced by PwC. The document calculates the total tax burden on a large bank by combining corporation tax, social security, value-added tax, and specific bank levies. It places London's rate at 46.2 percent. This figure exceeds 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 sent a letter to Chancellor John Healey to present these figures.

The timeline of the dispute began with the release of the PwC report. UK Finance then distributed the data to government officials. However, independent calculations reviewed by a leading accountancy firm suggest that the comparison leaves out a key competitor. A bank in Paris would face 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.

UK Finance explained that it considered adding Paris to the list but could not generate a comparable figure using its specific model. The group stated that retaining the same five cities allows for consistent year-over-year comparisons. It noted that previous editions of the report showed jurisdictions like Frankfurt with higher rates than the UK at that time.

Critics view the exclusion of Paris as a strategic choice. Paul Nowak, general secretary of the Trades Union Congress, described the lobbying effort as a misleading attempt to argue against fair taxes. He stated that the data does not reflect the actual taxes paid by Britain's big banks. Simon Youel, head of policy at Positive Money, questioned whether Paris was left out to support the claim that the City contributes more tax than any other global sector.

The TUC has proposed that increasing the bank surcharge from 3 percent to 8 percent could raise 2.25 billion pounds per year. Banking leaders have offered mixed reactions to the debate. CS Venkatakrishnan, chief executive of Barclays, said on Thursday that the financial impact of a tax rise would be bearable. 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.

A Treasury spokesperson said that decisions on tax are for the Chancellor to set out at fiscal events. The department added that it does not routinely comment on rumors or speculation. PwC has been contacted for comment regarding the methodology used in the report.