London bank tax comparison challenged over omission of Paris figures
UK Finance says London has the highest tax burden among the financial centres in its comparison, and has cited this in arguing that a planned bank tax rise could make the city less competitive. Campaigners say the figures are misleading because Paris, a major rival, is missing from the analysis.
The report, prepared by PwC, puts London’s total tax rate for a model bank at 46.2%, against 42.2% in Amsterdam, 39.1% in Frankfurt, 29% in Dublin and 27.9% in New York. Guardian calculations reviewed by an accountancy firm estimate the comparable rate in Paris at 51.6% to 57.3%; UK Finance says it could not produce a robust like-for-like figure and kept the same five cities for consistency. The TUC says raising the bank surcharge from 3% to 8% could raise £2.25bn a year.
In short
- UK Finance’s comparison puts London’s bank tax rate at 46.2%.
- Paris was left out of the comparison.
- Campaigners say higher bank taxes could raise £2.25bn annually.
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The case for
UK Finance’s comparison suggests London already has a higher tax burden than several financial centres, so raising the bank surcharge could further weaken its appeal to firms choosing where to locate activity. It also argues that keeping the same five cities makes the report’s comparisons consistent, while a Paris estimate that cannot be robustly matched may create a misleading impression of precision.
The case against
Campaigners argue that omitting Paris leaves out a major rival and makes the comparison incomplete, particularly when the figures are used to claim London is unusually costly. Estimates reviewed by an accountancy firm put Paris’s comparable rate above London’s, suggesting the wider picture may not support that claim; they also point to the TUC estimate that a higher surcharge could raise £2.25bn a year.
Explained simply
Banks in Britain pay several taxes, including corporation tax and a separate surcharge on banking profits. UK Finance, which represents banks, has argued that higher taxes could make London less attractive to financial firms.
London competes with other European and global centres for banks and financial business. Comparisons of their tax burdens depend on which taxes and assumptions are included, and how similar the model banks are.
UK Finance commissioned PwC to compare a model bank across five cities. The figures matter to debate over the proposed tax rise and its possible effect on the City of London, while campaigners say leaving Paris out makes the comparison incomplete.
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Originally published by The Guardian as “Is London really the most-taxed city? Banks accused of cherrypicking data”.