Queen, Prince Charles to start paying income tax, Major says

February 12, 1993|By Los Angeles Times

LONDON -- Queen Elizabeth II and her son and heir, the Prince of Wales, will begin paying the top tax rate on their personal income in April, Prime Minister John Major announced in Parliament yesterday.

Treasury officials indicated last year that the queen would pay tax at the top rate of 40 percent.

The question is 40 percent of what; estimates of the queen's fortune range from $135 million to $9.8 billion.

The agreement was disclosed after almost a year of negotiations among the Inland Revenue department, the British Treasury, and the Royal Household -- in the face of popular pressure that the queen should pay taxes.

But her fortune will not be subject to ordinary inheritance taxes on assets owned as the sovereign -- such as her castles, palaces, art collection and crown jewels.

"I believe that is necessary to protect the independence of the monarchy," said Mr. Major, who noted that, otherwise, the kingdom could be "salami sliced," reducing the royal assets over the generations.

But he said the inheritance tax "should apply to all bequests or gifts by the sovereign, other than to transfers of assets from one sovereign to his or her successor."

Mr. Major also told members of Parliament that the queen had agreed to cut the number of members of the royal family funded by the taxpayers, leaving on the Civil List -- the government-supplied allowance -- only herself; her husband, the Duke of Edinburgh; and the Queen Mother.

Further, Prince Charles will pay taxes at the ordinary income rate from his Duchy of Cornwall, which has large-scale real estate holdings, replacing the voluntary 25 percent he now pays.

A charitable trust will be set up to administer the queen's large art collection, Mr. Major said, which will be funded in part by public admission charges.

After the prime minister's announcement, members of the Royal Household headed by the Lord Chamberlain, Lord Airlie, held a rare media briefing.

Lord Airlie said that the new taxes would place a "considerable additional burden" on the queen's finances.

In explaining the queen's decision to subject her income to taxation, Lord Airlie declared: "It is only by moving with the times, not too fast and not too slow, that the institution itself can continue to make its essential contribution to national life."

In his statement to the House of Commons, Mr. Major said that the royal family's tax figures would remain confidential -- as is the case with every other taxpayer.

But Phillip Hall, author of a book on royal finances, estimated that the queen had personal tax liabilities that could produce a $20 million annual payment.

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