The Graduate Tax: An Ideological Dead-End for Students

Discussion with several people around Sheffield Union indicates that some, wrongly in my opinion, see the graduate tax as a step forward for students. There are three points that are made to support this position. The first is that the tax is progressive – graduates would pay a sum matched to their earnings, as opposed to a blanket rate of interest that kicks in at a certain income threshold. The second is that there is a psychological difference between “debt”, on the one hand, and a “tax” on the other. “Debt” will deter prospective students, “tax” will not. The third is that the graduate tax, although not perfect, is the only politically viable option – to argue for a reduction in the contribution of graduates is wishful thinking. I examine each argument in turn.

Any discussion about the proposed tax has to be put within the more general context of the existing funding system. As it happens, the balance between the contribution of students, the state and the corporate sector is, in comparison to other European countries and America, weighted favourably toward the British corporate sector. British business, according to Sally Hunt, the UCU general secretary, has a good deal, paying on average 24% less towards the cost of the HE system than its continental comparators. Within this context, calls for graduates to pay more for their education cannot be seen as a step forward – a larger graduate contribution simply exacerbates the existing imbalances.

This is exactly what those proposing a graduate tax advocate. The NUS estimates that the majority of students will pay more under their plans for a graduate tax than they do under the current tuition fee system. Although the tax would link this payment to earnings, the vast majority of those leaving university would be worse off. In this respect, arguing for a graduate tax is akin to arguing for higher tuition fees for the majority of graduates – hardly a step forward.

Regardless of the psychological effects of re-branding an increase in tuition fees as a “tax”, increasing the graduate contribution is objectively an attack on the living standards of those on medium and, indeed, low incomes – an attack made all the worse by the imbalanced context in which it takes place.

Not all graduates leaving higher education go into medium income jobs. Graduates on lower incomes may face higher tax rates than colleagues earning similar amounts of money who have not been to university – this amounts to a selective tax hike on low earners. This iniquity is the natural result of any tax based on use, a concept which itself flies in the face of any progressive ethos of taxation.

It’s in this sense that the graduate tax proposal indicates a worrying attempt to ideologically entrench a consumerist view of taxation, as opposed to the historical use for which taxes have been used – redistribution. This consumerist ideology is contrary to the principle that any robust defence of a publicly funded HE system must adhere – that investment in our universities is good for the economy and therefore society, not just the individual. In this respect, the graduate tax is an ideological and rhetorical dead-end for the student movement.

Naturally, this ideological dead-end has political consequences. In winning their demand for a graduate tax, NUS would make it harder to argue for a greater contribution from the state or big business. To do so, after espousing the virtues of a system which charges graduates more, would be massively inconsistent.

It cannot be stressed enough that the participants in the HE funding debate also shape it. The demand for a graduate tax frames the debate in the wrong way – the fundamental issue for the student movement is not about what form a graduate contribution should take, but about how much that contribution should be. Arguing for a graduate tax causes the debate to revolve around the wrong choice – a choice between two ways of increasing the graduate burden. It moves the debate to the political right.

While some see Vince Cable’s endorsement of a graduate tax as a victory, it can be more accurately described, I think, as an indication that Cable sees the tax for what it is – a way of increasing the burden on students that engenders minimal political opposition. After all, the NUS leadership cannot oppose it because they endorse this form of increased graduate contribution. In this respect, they’ve made it easier, not harder, to increase the burden on graduates. This is a tug-of-war contest – the student movement cannot win by “triangulating” and giving ground. If it does, the rope will only continue to be pulled in the wrong direction.


One thought on “The Graduate Tax: An Ideological Dead-End for Students

  1. Pingback: Fighting the Browne review means making the case for investment in our Universities « The Retrofit Lefty

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