FicFan.org

"It all goes back to the Treaty of Carlisle," Hermione replied, dropping into "lecture mode". "The Minister of Magic is the Queen's magical Justice of the Peace, and the Ministry of Magic is nominally part of her government. The Treaty allows the Minister of Magic to collect taxes from witches and wizards on the Queen's behalf, and to use these funds to run the "her" magical ministry. But then the Ministry building was destroyed in the 1700's during one of the Goblin Rebellions, and there wasn't enough tax money to rebuild it. So, the Minister of Magic convinced King George to "redirect" the annual lease payments paid by witches and wizards who lived on Royal lands to the Ministry, rather than to the Crown. And the rest, as they say, is history. Nobody let the Crown know when the Ministry had been rebuilt, so the rent money on Royal lands has been added to the Ministry's coffers ever since."

"Hmmm," thought Roger. "So when Prince Albert bought Balmoral, that 'redirection' of lease payments began to apply here?"

"Exactly," Hermione replied. "Brought in so many galleons that the Minister of Magic was able to drop income tax rates by two-thirds. And by amazing coincidence, that particular Minister still holds the record for longest term of office."

"But now that this land is back in Harry's private hands?"

"The Goblins figure that by giving these lands to Harry, the Queen's cut the Ministry's current annual revenues in half."

"Wow," remarked Emily. "So even if things don't change on Saturday, the Queen's hobbled the Ministry?"

"That's right," Harry said brightly. "Wasn't until I was told that point out that I started to like the deal."

http://www.fanfiction.net/s/3421129/64/