London really most-taxed city? Paris data challenges claim
UK Finance’s PwC report puts London’s total tax rate for a large bank at 46.2%, but excludes Paris. Guardian calculations, reviewed by an accountancy firm, put…
LONDON — London really most-taxed city? UK Finance says the capital has a 46.2% total tax rate for a large bank, but its comparison leaves out Paris, where Guardian calculations put the same bank’s rate between 51.6% and 57.3%. The dispute comes as banks warn that a tax rise in next week’s budget could push business and jobs to rival financial centres.
The figures have put the way banks compare tax burdens under scrutiny. The Guardian’s calculations were reviewed by a leading accountancy firm; UK Finance says it could not produce a robust like-for-like Paris figure using the report’s model bank.
Paris changes the comparison
UK Finance represents banks including Lloyds, JP Morgan and Revolut. It commissions an annual report from PwC that estimates the taxes shouldered by a large bank, including corporation tax, social security, VAT and bank-specific levies.
The report ranks London above four cities included in its comparison. It gives Amsterdam a total tax rate of 42.2%, Frankfurt 39.1%, Dublin 29% and New York 27.9%. Paris does not appear in the table, despite being a major rival financial hub and home to large investment banks including JP Morgan, Goldman Sachs and Barclays.
According to the Guardian’s calculation, a comparable bank in Paris would face a rate between 51.6% and 57.3%—as much as 11.1 percentage points above London. That finding complicates the claim that London’s tax burden makes it less competitive than every rival city. It does not, by itself, establish the actual taxes paid by banks operating in either market.
UK Finance said Paris was considered for inclusion but that the group could not create a robust comparison using the report’s model bank. It said the same five cities had remained in the report to support comparisons over time, and noted that previous editions had shown Frankfurt with higher total tax rates than the UK at the time.
Lobbying ahead of the budget
UK Finance has used the report’s figures in its argument to the government. In a recent letter to John Healey, the chancellor, the group warned that banks could move business and jobs to competing hubs if they faced higher bills. The proposed rise is due to hit the sector at next week’s budget.
Campaigners say leaving Paris out weakens the case. 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.”
Positive Money also questioned the methodology, pointing to “the conspicuous absence of Paris, one of London’s biggest rivals as a financial centre”. Simon Youel, the group’s head of policy and advocacy, said: “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.”
The dispute matters because the figures are being used in a live argument over who should bear the cost of higher taxes. Banks’ warning focuses on competitiveness and the possibility of business and jobs moving. The campaign groups argue that headline city comparisons do not settle what Britain’s banks actually pay, while pressing the government to seek more revenue from the sector.
The TUC says reversing Tory cuts and raising the bank-specific surcharge from 3% to 8% could bring in £2.25bn per year. Nowak said workers needed support and argued banks that had benefited from windfall profits should pay a fairer share. UK Finance disputes the suggestion that Paris was excluded because of its tax position; its stated reason is that it could not make a like-for-like calculation under the model.
“Britain’s banks are booming and are paying out billions to shareholders and senior execs while millions struggle to make ends meet,” Nowak said. “It is right to ask them to pay more tax.”
Source: theguardian.com
