Frequent Myths, Infrequent Truths

I have previously outlined my proposal for a Mixed Graduate Tax, based in part on the NUS, and in part by my own research. Throughout my research, I have self-evidently encountered arguments against a graduate tax (more often than not, a ‘pure’ form of it – telling enough?). Here is a selection of them, and my rebuttals:

1. A graduate tax will require centralisation.

In one sense, yes. But HE has always been centralised given the ESRC, HEFCE and other educational bodies. The HE Trust will be a subsidiary of the HE Council, the Council which will come into being anyway. The Treasury will have limited, if any, influence in the Trust, because the money will largely be redistributed back to the universities – the government will not have control over the money.

This also defeats the related point that it breaks a link between universities and students. Universities will receive the Trust money based on their students success, intended to act as an incentive for universities to continue their own investments.

2. People will be paying back for their degree for a lifetime.

Using my model MGT, students will be paying for 20 years. This is no different to the majority of students at the moment paying off tuition fees (indeed, usually for 25 years). It will not act as a disincentive either – the real disincentive is the prospect of £40,000 debts.

3. It will act as a brain drain: people will go abroad to study.

This isn’t anymore of a case than it has been before. Indeed, one could plausibly argue that more students will study, because it will make their degree truly worthwhile. The funding from the HE Trust will ensure that funding and investment is available to sustain world class higher education. Will a future of £40,000 debt not act as a brain drain for 18 year olds?

4. This is a tax on success.

No, it isn’t. It is a tax on the value of your degree. This means that those who have contributed to your degree deserve a share in your good luck (good luck because your success is not entirely based on your own hard work, but the contributions from businesses, tax payers, the government and university staff). It is as much a tax on hard work as a £40,000 debt will be a single payment for success. Of the two options, which is fairer? Everyone given equal opportunity to succeed with their degree and paying their due desert, or… everyone paying the same amount, regardless of how useful it has been to you?

5. It will cost billions to implement.

This is an argument about the technicalities of the implementation of the graduate tax, and an argument that will lose force once it has been implemented. Yes, it will cost billions – but only in the short term. Once the MGT has been established, and the HE Trust coffers begin to rise, then the system will run itself. Can we afford to save in the short term at the cost of the long term? The transition, if handled correctly, can work. And the sooner this happens, the cheaper and better for everyone.

6. Hypothecated taxes tend to get raided by a cash-strapped Chancellor.

Admittedly, I am not a fan of hypothecated taxes, precisely for this reason. However, it is a trust in government that we must make. Besides, the government would hardly see this money, given it will be controlled by the HE Council and HE Trust. A safeguard can easily be made in statutory terms to prevent a Chancellor raiding the future of our Higher Education system. Students, tax payers, businesses and employers would be in uproar.

I hope this short set of answers will persuade people that a Mixed Graduate Tax can work for the benefit of students, society, businesses, employers, tax payers, and so on. We need to work out a better deal than tuition fees: invest, invest, invest!

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