Colin's Journal

There could be other candidates for the worst form of taxation possible, but the one described in this BBC article seems like a front runner to me. The idea is that it’s bad for university graduates to have an individual debt to pay off (i.e. a loan) and that instead it’s some how preferable for graduates to pay a special tax for the rest of their lives.

Now it could be that the duration of a graduate tax, as proposed, would be limited, but that in turn doesn’t make much sense. It would mean that the best thing to do after graduation would be to take a cheap job until this time limit expires, at which point you can get your high paying job and not pay the extra tax. Unless they tie the duration of the tax to how much you pay, in which case it’s effectively the same as individualised debt.

I used to be a big fan of free university education, after all I benefited from it myself, but it’s become clear that the current system is unsustainable. General taxation can not rise enough (and can not be justified) to cover the costs of providing a world class university education. The idea of some sort of graduate tax doesn’t work, and so the only real option left is loans that are tied to the individual that received the education. To make them palatable they should have only minimal interest, payments only triggered once a certain wage threshold is reached, and a limited life span so that they are written off if you still have them after 20 years.

Once this issue is resolved the next major step for the UK in terms of university education will be whether private universities can develop. From the point of view of generating more choice and giving the existing state universities some competition it seems like a good idea. Once the fees for the top state universities reach the levels that are required to keep top notch facilities and staff, the potential private universities will not be priced out of the market as they are today.

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