Sir: It is not clear what you envisage (leading article; "Why graduates should pay more", 2 February) for your proposed tax on graduates, of "an extra 1 per cent on income tax for all graduates earning more than pounds 15,000 for the first 10 years after graduation".
This could mean 1 per cent on all taxable income; 1 per cent on income over and above pounds 15,000, or 1 per cent on the whole earned income. But even the last of these - which would provide the highest yield - would raise relatively little money. A graduate averaging pounds 30,000 a year - a high level for the first 10 years after securing a degree - would contribute only pounds 300 a year.
That should be compared with the extra tax contributed under our moderately progressive existing tax system. As from April, somebody earning pounds 15,000 a year will pay about pounds 2,600 in income tax. At pounds 30,000 the tax liability is almost pounds 7,000 - and about an extra pounds 100 a month is levied in contributions to so-called National Insurance - pounds 5,600 a year in all.
Given the benefits to employers of graduates, the economy and the community that flow from their degrees, the correct approach is clearly for the Government to shift its priorities in determining how expenditure is allocated, and to give proper financial support to its objective of expanding higher education.
Harvey R. Cole
2 FebruaryReuse content