Is London really the most taxed city for banks? A UK Finance report says so - but the lobby group has been accused of cherrypicking data and trying to mislead the British government by leaving Paris out of the picture, days before chancellor John Healey sets out his budget.

The report behind the lobby's warning

UK Finance, which represents banks including Lloyds, JP Morgan and Revolut, commissions an annual report on all taxes shouldered by a large bank, covering corporation tax, social security, VAT and bank-specific levies. The report is put together by PwC and lists London as the most tax-intensive city, with a total tax rate of 46.2%.

The same study sets out a total tax rate comparison against four rival hubs:

• •Amsterdam, 42.2%
• •Frankfurt, 39.1%
• •Dublin, 29%
• •New York, 27.9%

UK Finance pushed the figures in a recent letter to Healey, warning that banks could shift business and jobs to rival hubs if faced with higher bills.

The Paris question

Paris - host to JP Morgan, Goldman Sachs and Barclays investment banking operations - has consistently been excluded from UK Finance comparisons.

Guardian calculations reviewed by a leading accountancy firm suggest a bank in Paris would face a total tax rate of between 51.6% and 57.3%, up to 11.1 percentage points higher than London.

UK Finance said it could not produce a robust like-for-like figure using the report's model bank, and that the five cities were kept consistent to allow comparison over time. It added that past editions showed Frankfurt with higher rates than the UK at times.

PwC has been contacted for comment.

Critics and the case for a tax rise

TUC general secretary Paul Nowak argued that Britain's big banks likely pay far lower actual taxes than many competitors. He said: "It's little surprise that some in the finance lobby are cherrypicking jurisdictions to aid their argument."

Nowak added that Britain's banks are booming and are paying out billions to shareholders and senior execs while millions struggle, making it right to ask them to pay more tax.

Simon Youel, Positive Money's head of policy and advocacy, questioned 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. "Hopefully John Healey is smart enough to see through the wool being pulled over his eyes," he said, urging the chancellor to follow other countries in raising bank taxes to claw back windfalls from higher interest rates.

The TUC says reversing Tory cuts and increasing the bank surcharge from 3% to 8% could raise £2.25bn per year.

What the banks and the Treasury say

The banking side is split. Barclays chief executive CS Venkatakrishnan told journalists on Thursday that the financial hit from a bank tax rise would be "bearable" and gave the chancellor his full support.

JP Morgan boss Jamie Dimon has been more forthright. In May he warned he could scrap plans for a new £3bn London headquarters if Britain became "hostile" to banks - a plan announced days after former chancellor Rachel Reeves spared the sector from a tax rise last year.

Dimon met Andy Burnham and John Healey last month and warned that further levies could put investment and jobs at risk.

For its part, a Treasury spokesperson said decisions on tax are a matter for the chancellor to set out at fiscal events, and that the Treasury does not routinely comment on rumour, speculation or proposals. The budget is due next week.