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Graduates: Taxation

Volume 487: debated on Thursday 29 January 2009

To ask the Secretary of State for Innovation, Universities and Skills if he will assess what effect the introduction of a graduate tax would have on university students. (252553)

We have no plans to assess the effect of introducing a graduate tax for repayment of financial support made to higher education students. A graduate tax was considered alongside variable and fixed fee options as part of the student finance review in 2002 and the White Paper ‘The future of higher education’ in 2003.

A number of disadvantages were identified including: the cost of a graduate tax (which is greater than variable fees and loans), the lack of any mechanism for early additional repayments and the slower rate of repayment of a graduate tax when compared with loans.

Government concluded that the Graduate Contribution Scheme based on variable fees of up to £3,000 set by higher education institutions presented the best option for both students and universities and this was subsequently enacted via the Higher Education Act in 2004.