A POLITICAL row broke out last night as Chancellor Norman Lamont

rejected demands that the Queen and other members of the royal family

should pay income tax.

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Labour MPs reacted angrily to the Chancellor's ''deplorable'' refusal

in a Commons written reply to Mr Jim Cunningham (Coventry South-East --

Lab.).

Now, some of them have urged the Queen to volunteer for income tax.

There were reports in the summer that she was about to agree to pay

tax.

However, these were dismissed at the end of August by Buckingham

Palace and the Prime Minister's office.

Mr Cunningham asked Mr Lamont to ''extend taxation of income to

members of the Royal Family who are currently excluded''.

Mr Lamont replied: ''I have no plans to do so.''

Mr Dennis Canavan (Falkirk West ) said at Westminster: ''It is a

deplorable answer, particularly bearing in mind the fact that the Queen

is one of the richest people in the world.

''Many other members of the royal family are living off taxpayers'

money. The grave economic situation in the country should be recognised

by the royal family and despite the Chancellor's negative response, it

is up to them now to express a willingness to make a contribution

through the tax system.''

Mr Robert Hughes, MP for Aberdeen North, said: ''I would have thought

the Chancellor would be desperate to get some extra revenue. I am

surprised he turned it down.''

Mr Andrew MacKinlay, MP for Thurrock, said: ''This will make a lot of

people angry. It is demonstrably unfair. The Queen ought to pay tax and

so should other members of her family.

''This aggravates the situation of the monarchy.''

Mr Alan Williams, MP for Swansea West, said: ''The Queen is a

billionaire. Her income from investments is a closely guarded secret.

Why should she pay no tax when her subjects on minuscule incomes are

paying tax?

''No-one is allowed to know the concealed costs of the Civil List. The

Palace and the Government make a serious error of judgment if they think

people will tolerate this unquantified privilege indefinitely.''

* Queen Victoria paid income tax, but this position was steadily

eroded until it was finally abolished for George VI, the Queen's father.