Graduate tax, graduate exodus?

An article on the Guardian website last Monday claimed that the UK’s best graduates would emigrate after graduation, if Vince Cable’s proposed ‘graduate tax’ plans were passed.

Under the current system for funding Higher Education, graduates pay back any loans they take, plus interest, once they are earning over £15,000 per year. Under the graduate tax system, however, the amount of money graduates would have to repay would be based upon their income rather than what they borrowed, meaning lower income earners pay less for their education than higher income earners. This seems particularly unfair on those whose study leads them to enter professions where higher salaries are more common, such as lawyers, doctors and bankers, for example.

Richard Lambert, director-general of the Confederation of British Industry, said business leaders had decided a graduate tax would create more problems than it solved. He went on to say that “If we had [this tax], UK students would have an incentive to work overseas to escape paying, especially when the top rate of tax is 50%.”

In light of this article, we created a poll in our General University Discussion forum to ask “Would you emigrate to avoid the graduate tax? (Hypothetically speaking)”

Of the 140 people that voted in our poll, a strong majority of 68.6% said that the graduate tax would prompt them to emigrate after graduation, or at least encourage them to think more seriously about it. 20.7% of voters said that it would not encourage them to emigrate, but that they would probably not be too happy about paying back more than other graduates. 10.7% said that they were unsure as to whether they would be more likely to emigrate or not. Below are the full poll results:

Would you emigrate to avoid the graduate tax? (Hypothetically speaking)

  • Yes – 96 voters, 68.57%
  • No – 29 voters, 20.71%
  • Unsure – 15 voters, 10.71%

The results, and many of the comments of our students and graduates, adds to the criticism that the graduate tax proposal has already received from various corners. A number of comments made by our students suggest that the graduate tax proposal is just another in a list of reasons why emigrating is an enticing prospect. One member said “I would like to emigrate anyway, and the prospect of these kind of high taxes is yet more motivation”, while another student said that “it would definitely make me want to move. It is ridiculous that someone who works hard to put themselves through uni will have to subsidise people doing mickey mouse degrees that earn them no money.” Not everyone was so dismissive of the proposal, however, with one member saying that although they “haven’t borrowed as much money as a lot of people have, I would get really annoyed if I ended up paying more than them”, they would still “have to think hard” about moving abroad. One member in favour of the tax said “I’d be happy to pay the tax. If you’re not happy to pay the tax, don’t go to university.”

A review of student finance, with the aim of finding a way of cutting the public cost of funding students through university, is due to release its findings next month, and will help inform the government’s spending cuts, which will be announced later this year. Until then, the speculation around the graduate tax is likely to continue, though it currently seems to lack the support necessary for it to come to pass.

Read the Guardian article in full, Graduate tax would prompt top graduates to leave Britain, CBI warns.

For more insight into the opinions of our university students, visit our General University Discussion forum. To see the full discussion by our members on this topic, read the thread Would you emigrate to avoid paying the graduate tax?