Graduate tax proposal slammed by experts


Government proposals to bring in a radical new way of charging students for university have been systematically slammed by ministers, university leaders and educators alike.

Under the new plans, a graduate tax system would be introduced, which would see university graduates paying special rates of tax once they reach a set earnings threshold, as opposed to the current fees system.

The Coalition Government has so far championed the new plans, with Universities Minister David Willets saying the Government was interested in a scheme where successful graduates make a “higher contribution to the benefits of the university education they have received.”

Foundations for such a plan were previously laid out by the Business Secretary Vince Cable, who initiated discussions for traditional student fees systems to be replaced by the new, earnings-based tax levy.

However, people have been quick to point out the potential pitfalls of such plans, including reduced competition between universities, less money coming in from foreign students, and even the possibility of giving graduates further incentive to leave England and work abroad as expats.

Wendy Piatt, of the 20-university strong Russell Group, said: “A graduate tax could also discriminate against British graduates who would pay over a lifetime, while other beneficiaries of UK degrees – as well as British expatriates – may be able to avoid paying entirely. It would be difficult in the extreme to levy and collect a tax from graduates living and working overseas. A graduate tax would introduce perverse incentives for our best graduates, both home and EU, to move abroad and deprive the UK of vital skills and knowledge.”

Worries also lie with how the ‘graduate tax’ money will be distributed. The current system sees the fees collected and then handed out to different universities, with the best universities receiving more funds. However that could change under the new system. Nicholas Barr, a professor at the London School of Economics, said: “With a graduate tax, finance remains closed-ended. The Treasury continues to control the funding envelope, and Oxbridge and Balls Pond Road Tech compete for the same funds.”

Piatt added that: “A graduate tax would provide little incentive or adequate resource for universities to drive up quality. Because it breaks the link between the contribution which graduates make and the university they attended, a ‘pure’ graduate tax wouldn’t reward the best institutions for investing in the student experience, and giving their graduates the best possible prospects for their future careers.”