Thursday, 6 September 2012

A retrospective graduate tax

by Mark Corney

Ministers and their shadows remain open to the charge of introducing tuition fees for full time higher education when ‘they got free HE’.

Even though funding tuition fees through income contingent loans softens the blow for current students, the sour taste between the generations lingers.

As someone who received 'free HE' I have sympathy with the argument that my generation should make a contribution.

Somehow a policy must be devised where graduates before 1998 make a contribution towards the 'free' higher education they received. 

A retrospective graduate tax where pre-1998 students pay a higher rate of national insurance is usually viewed as a potential solution. Asking hard working middle income graduates to pay more tax during their lifetime could be difficult.

An alternative would be to recoup a graduate contribution from pre-1998 at the point of death. The first call on estates should be, say, £7,500 for funeral expenses. But the second call of, say, £10,000, should be a graduate contribution paid into a centrally held fund to be reinvested in higher education.

Universities and other higher education institutes should have a record of all their graduates and presumably their date of birth. They would be required to send information on graduates to the tax man.

As part of finalising estates solicitors would be required to check if the deceased was a pre-1998 graduate. If so, £10,000 would be paid into the HE fund as part of the final settlement.

All pre-1998 graduates with estates in the UK would fall in scope including those living abroad. Only those living abroad with estates taxed abroad would be missed.

The taxpayer can no longer afford 'free' HE for future generations. It is surely right, then, that those who have benefited from 'free' higher education should make a contribution at the end of their privileged lives.

Mark Corney is policy adviser to the Campaign. He writes in a personal capacity.

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