The Queen must pay higher-rate tax, MP demands

AN ASSURANCE by the Prime Minister that the Queen will pay tax at the 40 per cent higher rate was demanded yesterday by a Labour MP after Downing Street refused to make any commitment.

Jeff Rooker, the Labour MP for Birmingham Perry Barr, and a specialist on tax and social security benefits, said it was 'inconceivable' that the Queen would not pay tax at the higher rate.

'She must pay at the higher rate because she must have disposable income well above the limit for the lower rate. I hope she is going to pay national insurance contributions as well because that is regarded as a tax for all practical purposes,' Mr Rooker said.

John Smith, the Labour leader, has made it clear to John Major that he can expect to be closely questioned when he makes a statement to the Commons shortly about the Queen's tax payments, which she has agreed to make from 1 April.

There would be an outcry from Opposition MPs and some Tory MPs would regard it as a missed opportunity to recover lost authority by the monarchy, if the Queen's tax deal was not seen to be fair.

The Prime Minister has kept the issue of taxing the monarchy out of the hands of Treasury ministers. One source said: 'We are being kept completely in the dark. It's all being done by the Prime Minister's office.'

The Prime Minister's office said yesterday the 'leg work' involving detailed assessments of the Queen's taxable income was being done by officials at the Inland Revenue in negotations with officials at the Palace. They would report to the Queen through Alex Turnbull, the Prime Minister's principal private secretary.

The officials are negotiating over which parts of the monarch's wealth should be taxed. The palaces such as Windsor and Buckingham Palace and the Crown Jewels are held for the nation, and are not the Queen's personal property. Her main tax liability will come from her investment portfolio, the value of which has never been disclosed.

Early estimates suggest that although the Queen is one of the world's wealthiest women, her taxable private income may be only about pounds 1m-5m a year, producing a tax bill of up to pounds 2m, if the higher rate is paid.

Ministers are precluded from dealing with or disclosing the tax details of any individual. It is likely that details of the Queen's tax liability will remain confidential, despite Mr Major's statement to the Commons. But the cost to the taxpayer of the trappings of royalty may come under scrutiny.

The cross-party Commons Public Accounts Committee is reviewing the cost to the taxpayer of the Royal Palaces, following the fire at Windsor Castle, which may cost more than pounds 60m to restore. Alan Williams, the Labour MP for Swansea West, is planning to press for the committee to expand its inquiry to cover the Royal Train, which is costing about pounds 2.2m a year and the Royal Yacht, which cost pounds 9.3m in 1990-91.

The total cost of running the monarchy amounted to about pounds 57m in 1990-91 and many MPs believe that to reflect changing public attitudes in the wake of the Queen's annus horribilis, the modern monarchy should be prepared to trim its sails. The Royal Yacht could be the first victim.