Featured image via M.Zhu on Flickr.
When the Panama Papers were leaked last year, they shone a light onto a shady world of tax avoidance (or evasion?) for the super-rich. Recently, a new set of 13.4million private documents, called the ‘Paradise Papers’ have brought the issue once again to public debate. Much of the leaked Paradise Papers come from one company, Appleby, which specialises in offshore accounts. Those caught up in the scandal of offshoring money for tax reasons include stars of the sitcom Mrs Brown’s Boys, The Prince of Wales, Lord Ashcroft, Apple, and various North American politicians. But today I want to focus on one actor – the Queen – whose financial and public arrangements have warranted a confused response from much of the public.
Who is accountable for the Queen’s finances?
Something that was noted on social media was people saying that the Queen shouldn’t be expected to keep track of any fraudulent or shady financial activity that she is involved in, as she has advisors for that. This argument has not been widely mirrored for other public figures, such as Bono or Lord Ashcroft. The question is – where does the buck stop?
In the case of the Duchy, which has had specific practices revealed in the Paradise Papers, the finances are said to be run by the Chancellor of the Duchy of Lancaster. The website of the Duchy of Lancaster states that the appointment is made by the Queen on advice of the Prime Minister. It also says that the Chancellor is accountable to the Sovereign personally, rather than to Parliament. This means that the Chancellor is not independent of the monarch – being accountable to her – and that she has a great deal of control over the Duchy’s finances.
It would not be unreasonable to conclude that the monarch has a duty to ask (assuming she has delegated decisions to the Chancellor) that investments are made ethically.
Does the Queen need to pay tax?
It was agreed in the 1990s that the Queen would pay a voluntary, undisclosed, amount of tax on income; and, again, a voluntary amount of tax on VAT. [Page on royal.uk].
If the Queen didn’t want to pay tax, then theoretically she could cancel this agreement. Unfortunately this would not be without significant public backlash, given the recent ring-fenced rises in the royal’s income.
Why is the Queen evading/avoiding tax significant?
The Queen has an open line to government and ministers, and significant power over new legislation (which is occasionally exercised), giving her undue influence. Her personal wealth and investments creates a conflict of interest in decisions about tax.
Yet we cannot know whether the monarch has used her undue influence to protect royal investments and wealth.
What should be done?
A simple solution would be for an inquiry to be made about where the Queen is making her money, and what taxes (at what rate) she is paying. The same inquiry should investigate whether there has been any lobbying of the government regarding tax.