From Town & Country
No one likes paying taxes and heads of state are no exception. This fact was hammered home last week when the New York Times reported that President Donald Trump, through a series of complex accounting moves, paid minimal tax while in office and even less before he was elected.
Usually governments do everything they can to collect money (Trump, in fact, is being audited by the IRS), but sometimes heads of state can avoid paying tax with the help of the state. For forty years, up until 1993, the British Queen enjoyed an income tax exemption thanks to the generosity of successive UK governments who played cat and mouse with Parliament and the media to keep the matter away from public scrutiny.
Why was it allowed in the first place and, more important, how much was it worth? Recently, some answers have begun to emerge from the vaults.
Panning for gems in the archives of the British royal family can be frustrating work given all the special privileges they are granted that prevent proper public scrutiny of their wealth, such as sealed wills and personal correspondence closed for a lifetime, but just occasionally you hit paydirt. After being refused more than 20 Freedom of Information requests while investigating the royal finances, I won one recently involving a cache of documents in the UK National Archives about a little-known 1989 review of the Civil List, the forerunner of today’s taxpayer-funded Sovereign Grant, which pays for all the running costs of the British monarchy. The jewel in the cache was an official UK Treasury paper that revealed that the monarchy was in part funded through tax breaks for the Queen.
“The State provides for the monarchy in two ways: first through explicit finance (currently votes and the Civil List) and secondly by foregoing tax on the Sovereign’s private wealth.” The indiscreet 1989 tax memo went on to spell out why this was significant: “In practice it should be noted that immunity from taxation has enabled the Government to pay a small Civil List confined to specific official aspects and thus keep the whole issue of financing the monarchy in a rather lower key than would otherwise be the case.”
Why was this disclosure such a big deal? Royal watchers had long suspected that the Queen’s special privileges might be granted for some ulterior motive, but here it was set out in black and white for the first time. The tax breaks were a backstairs way of funding the royal household and keeping its real cost under wraps.
A history of royal exemptions
The suspicion that the government was being less than clear with the public about what was really going on was confirmed by a related document. The December 1989 Review of the Civil List, chaired by the Treasury’s most senior official, Permanent Secretary Sir Peter Middleton, revealed that the true