THE BLOG

Royalty, Tax, Smoke, Mirrors

06/08/2013 17:20 BST | Updated 28/09/2013 10:12 BST

For many the name 'Windsor' resonates Britishness in much the same way as strawberry jam melting over a hot buttered scone; it inevitably conjures up the image of a royal family which has centuries-old roots embedded in the nation's heartland.

In reality though, it was only relatively recently that the Royal family began to use the moniker -- in fact, in the early twentieth century, the royals had gone by the name of 'Saxe-Coburg-Gotha'; but after the advent of the first world war and the rush of anti-Germanic feeling which accompanied it, the Royal house no doubts felt changing its name to 'Windsor' would better disguise its Germanic links and help assure the population of an authentic brand of Englishness. The use of 'Windsor' was, therefore, what the late historican Eric Hobsbawn might have referred to as an 'invented tradition'.

Invented traditions seem to wrap themselves around the royals more generally. In the last couple of weeks the issue of Prince Charles' tax arrangements has enjoyed a level of coverage partially obscured by bigger stories -- such as the royal birth. Nevertheless, enjoying the significant remunerations which come from his hereditary ownership of the Duchy of Cornwall and its considerable estates, it is perhaps not unsurprising -- given our lean economic times -- that the Prince's economic affairs should be placed under scrutiny.

And, after a senior aid of Charles' was questioned by an accounts committee, a media debate broke out of the usual sort; pitting the principle of egalitarianism against that of tradition. Those who believe that the multi-millionaire prince should be made to pay a level of tax which is equal or exceeds that paid by his army of servants -- were virulently opposed by those partial to the mumbling, plant-serenading heir to the throne in perpetuum, and believe any attack on his economic privilege would constitute an erosion of tradition time immoral, that the ravens would flee flapping and squawking from the tower and the whole national edifice would come tumbling down...

But who can really say which of these standpoints is fundamentally more rational and coherent? Whatever the case, one thing worth noting is that the idea of Charles' tax exemptions as part and parcel of an organic and unbroken tradition stretching back centuries is less than tenable, and much more of an 'invented tradition' in the Hobsbawn sense of the concept. In his seminal work on the Royal Family's tempestuous relationship with taxation -- Royal Fortune -- writer Phillip Hall points out that there was a historical period of time when the Duchy of Cornwall was indeed subject to the taxation arrangements of any other large scale landlord.

This changed when, in 1913, law officers of the crown lobbied to ensure that the Duchy, and the Prince of Wales thereby, would enjoy the same tax exemptions as the monarch himself. However Hall notes that the people who would have read about this at the time 'might think that the Prince of Wales should pay' anyway, so the royal officiaries were forced to insert an ameliorating clause -- the prince might 'not wish to insist upon his privilege of exemption' and could make a voluntary tax contribution if he so wished.

When the First World War ended, the British government put on the pressure again; the 1918 Income Tax Act specified that the Duchy pay all the taxes of any other estate holder. But the prince retaliated. After painstaking investigation, and in true Da Vinci Code fashion, Hall was able to unearth a dust ridden treasury document marked 'SECRET' which disclosed how, in 1921, the prince lobbied the government to revert to the former 1913 exemption legislation on the grounds that he was 'taking a much more active part in public affairs, which involves...greatly increased expenditure'. (Don't try this with your local tax office, they just won't have it)

The state then capitulated -- but in a bizarre fashion. The Duchy tenants continued to pay tax to the Inland Revenue -- but at that point it was then refunded to the Duchy without the tenants or anyone else any the wiser. It could, therefore, appear as though the Duchy was subject to the normal tax arrangements while the Prince continued his economic activities largely tax exempt. Hall provides a convincing portrayal of the sustained attempt by Royalty to use every conceivable measure: amelioration, disinformation, cover up -- anything and everything to reduce pain to the royal pocket. These, then, are the true traditions which lie behind the Duchy's chequered tax past.

And it seems as though they have been upheld in recent years too. Andrew Duncan notes in his book -- The Reality of Monarchy -- that a Central Office of Information pamphlet (The Monarchy in Britain), clearly suggested Prince Charles paid income tax on all his income when this was clearly not the case. And when his tax affairs were more heavily scrutinized, the royal propagandists made much of the fact that, on reaching 21, Charles began making a voluntary contribution of 50 percent to the treasury.

But, in the scheme of things, this provides little more than a dent in his overall wealth -- and, more importantly, it obscures the fact that -- had Charles been paying the tax revenue expected by the state from its citizenry -- the amount paid to the treasury, according to Duncan, would have exceeded the 80 percent mark. On defending the Prince's exemption from corporation and capital gains tax, Charles' aide, William Nye, commented on the Duchy rather enigmatically -- 'the fact that it's a large set of properties and its worth a lot of money doesn't per se make it a corporation'. What it actually is Nye has not yet deigned to tell us. Though he did laud the Prince's voluntary contribution. Because after all, he is just doing his subjects a favour, really. A right royal one at that