Banks' 'Most-Taxed City' Claim Under Fire Over Paris Omission

London's total tax rate for large banks is 46.2% — but the same bank in Paris would pay between 51.6% and 57.3%, according to calculations by the Guardian reviewed by a leading accountancy firm. The finding undermines a banking lobby report that ranks London as the world's most tax-intensive financial hub.

UK Finance, which represents banks including Lloyds, JP Morgan and Revolut, commissions an annual report from PwC tallying all taxes shouldered by a large bank: corporation tax, social security, VAT and bank-specific levies. The report puts London's "total tax rate" at 46.2%, ahead of Amsterdam at 42.2%, Frankfurt at 39.1%, Dublin at 29% and New York at 27.9%.

Why is the data being questioned?

Paris has consistently been excluded from UK Finance's city comparisons, despite hosting large investment banks including JP Morgan, Goldman Sachs and Barclays. The Guardian's calculations show the same model bank in Paris would face a total tax rate up to 11.1 percentage points higher than London's.

UK Finance pushed the figures hard, including in a recent letter to John Healey, the chancellor. It warned that banks could shift business and jobs to rival hubs if the government raises their tax bill at next week's budget.

UK Finance said it considered including Paris but couldn't produce a "robust like-for-like figure using the report's model bank." It added that the five cities included have stayed consistent to support comparison over time, and that previous editions showed jurisdictions such as Frankfurt with higher total tax rates than the UK.

What are campaigners saying?

Paul Nowak, general secretary of the Trades Union Congress, said: "It's little surprise that some in the finance lobby are cherrypicking jurisdictions to aid their argument. This is a misleading attempt to make the case against fair taxes … it tells us nothing about the actual taxes paid by Britain's big banks, which are likely far lower than many competitors."

Simon Youel, head of policy and advocacy at Positive Money, said the omission raises questions about the report's methodology. "This raises the question of whether Paris was cynically omitted to allow the report's sponsor, UK Finance, to claim that the City contributes more tax than any other global financial sector," he said.

Youel added: "Hopefully John Healey is smart enough to see through the wool being pulled over his eyes by City lobbyists, and will follow other countries in raising taxes on banks to claw back enormous windfalls from higher interest rates being paid for by the public."

The TUC argues that reversing Conservative cuts and raising the bank surcharge — a sector-specific tax — from 3% to 8% would raise £2.25bn per year.

Nowak said: "At a time when working people are in dire need of support, the chancellor has a responsibility to ask those who have done well from windfall profits to pay a fairer share of tax. Britain's banks are booming and are paying out billions to shareholders and senior execs while millions struggle to make ends meet. It is right to ask them to pay more tax."

Where do the banks stand?

Some banking bosses have already conceded. CS Venkatakrishnan, chief executive of Barclays, told journalists on Thursday that the financial hit from a bank tax rise would be "bearable" and gave the chancellor his "full support."

Jamie Dimon struck a different tone. The JP Morgan boss warned in May that he could scrap plans for a new £3bn London headquarters if Britain became "hostile" to banks. That project was announced days after former chancellor Rachel Reeves spared the sector from a tax rise last year. Dimon met Andy Burnham and Healey last month and warned that further levies could put investment and jobs at risk.

A Treasury spokesperson said: "As has always been the case, decisions on tax are a matter for the chancellor to set out at fiscal events, and we do not routinely comment on rumour, speculation or proposals."

PwC has been contacted for comment. With the budget days away, Healey must weigh the £2.25bn on offer from a surcharge rise against Dimon's threat to a £3bn headquarters bet on the City.