JPMorgan CEO Jamie Dimon has renewed his warning that higher taxes on banks could make the UK a less attractive place to invest. He recently cautioned UK Prime Minister Andy Burnham that further levies on the financial sector may compel the Wall Street giant to rethink parts of its long-term expansion plans in London.
Specifically, Dimon said higher taxes on financial institutions could threaten plans to build its $4 billion, 279,000 square metre headquarters in Canary Wharf, London.
‘I mean, it may sound great, “tax the banks,” but it’s $5bn that my shareholders paid on that extra tax. I just think things like that have adverse consequences,’ said Dimon on the Master Investor Podcast recorded last week.
‘I would be very cautious if I was a government thinking that penalising any company out of the ordinary is a good thing for that country. I always thought [the UK bank levy] was wrong,’ Dimon stated. ‘JP Morgan did not damage the UK… [We] did not damage the UK. We’re a great citizen there. We hire people there. We want to be bigger there.’
Note that banks in the UK pay a 28% corporation tax rate, which is above the standard 25%. They also pay a separate levy on their UK balance sheets. Dimon approved the London headquarters last year after the banking industry was exempted from higher taxes in former chancellor Rachel Reeves’s autumn budget.
In May, Dimon said he could cancel plans to build the London headquarters if Keir Starmer were replaced by a new Labour PM who was hostile to banks. He reaffirmed his warning in the podcast, saying that he didn’t know about the future of the headquarters if the current government hiked taxes.
Burnham’s Potential Tax Hikes Driven by Pressure From Trade Unions
Dimon’s comments come as Burnham’s new Labour government faces growing pressure from trade unions to raise additional revenue by increasing taxes on the banking industry. Supporters argue that lenders have benefited from higher interest rates and robust profits in recent years, and are well-positioned to contribute more toward funding public services.
Trade unions backing higher bank taxes forecast that higher taxes on banks could generate around $12 billion over four years. Meanwhile, union leaders have dismissed warnings from banking executives, arguing that the government should not allow financial firms to dictate tax policy.
However, Dimon said additional taxes would send the wrong signal to international investors.
‘We don’t think it’s right to keep penalising banks,’ Dimon reportedly said, arguing that the UK already imposes a relatively heavy tax burden on lenders through corporation tax and the bank levy. He added that governments should be encouraging investment rather than creating policies that could drive capital elsewhere.
The debate comes at a delicate moment for the UK economy. Burnham’s administration has pledged measures to ease pressure on households, including reducing VAT on electricity bills, while also facing demands to strengthen public finances. Finding new sources of revenue has become increasingly important as borrowing costs remain elevated and spending commitments continue to grow.