Wednesday, September 22, 2010

UK poised for more big change?

There is an idea floating in Britain now which would see tuition fees abolished in favour of a "graduate tax" that university students would pay on their earnings once they graduate: "Graduate tax 'could hit UK's competitiveness'." It is being seriously considered in a review that's going on and is set to report in October. Under the graduate tax, one could end up paying much more in the long run than they currently do in tuition fees in the U.K. (presently about $5200 Cdn). No sense is given of how long this post-graduation tax would be in place. This change has been prompted by a Liberal Democrat election promise, funding issues and it might perhaps be brought in under the Tory coalition government.

You can see the immediate attraction for current students, free tuition, who doesn't love that. It would encourage accessibility to education, a good thing that's for sure. Yet the post-graduation costs would be there. You get a break yet the tax grab beyond could be much more significant than the present pay as you go model. Theoretically, progressive tax brackets account for higher earnings once you're out of school at present, in any event. So wouldn't this set up a system of almost double-taxation? Create greater cost burdens on business with graduates looking to account for that extra hit? All kinds of questions raised by this one but with the U.K. facing hard times, they're looking at it.