that may well be good, however what stops the government "Top-slicing" the money raised for other things other than universities?

Originally the Television License Fee was solely for the BBC to provide television, Radio and other broadcast services for the nation. thanks to the Labour government (who since 1997 has had a negative or should I say Murdoch point of view...) Top-slicing has now cut money to Digital Switchover (now thats underspent) now Broadband upgrades. what next?

Let's hope this graduate tax isn't top-sliced for payment of the next large sporting event.

Currently , once you start earning £15,000 you start repaying your debt back. The amount that is deducted varies according to your earnings, someone on 100k would have more deductions than a person earning 10 and therefore pay the debt back quicker.
I believe the debt is fixed and your point about the interest accruing over a longer period of time on lower earners and therefore costing them more is wrong.
These are the facts as they currently stand according to most websites for universities regarding loans - 'How much you pay each month depends on your income and is collected from your salary by the Inland Revenue in the same way as tax and insurance. After 25 years, any outstanding debt will be written off'

Up to £15,000 no repayments.
£16,000 £7 = 0.6% of salary
£17,000 £15 1.1%
£18,000 £22 1.5%
£19,000 £30 1.9%
£20,000 £37 2.3%

Putting everyone on a 2.5% graduate tax is going to disproportionately affect the lower earners, the current system might not be perfect but it is definitely fairer.
This Government plans to privatise student loans completely as detailed in the budget speech They want to abolish the government funded loan system and turn it all over into the hands of pension funds and banks which accounts for some loans currently provided....mainly for the more well off student. Labour were wrong to introduce this two tier system in the first place but at least they still provided a service for those less fortunate and affluent than others. This graduate tax is about securing some financial benefit for the Treasury from the total privatisation of student loans and is absolutely nothing to do with creating a level playing field.

What a joke - you have around 40% of people going to university and therefore paying a extra 2.5% income tax. It's a public good, the other half of the population will be benefiting from the boost to the economy of research etc, either as employers getting in the skills they need or whatever. If graduates earn 400k more over their lifetimes on average then 50k of that at least will be going into taxes anyway. Added bureaucracy seems to make it pointless.
Next we'll be saying only parents should pay supplementary taxes to support the schools budget, women supplementary taxes to support gynecologists, pale-skinned people to support skin cancer treatments, etc. If half the population benefit directly, and the rest indirectly, then just tax everyone the 1% or whatever needed

Graduate Tax Fails the Fairness Test

The current fee and student loan system is the best solution here and this is why.

The current system has been described as ’like going to the cinema and, on the way in, having someone give you the entrance fee and agreeing to let you repay it after you leave’. This seems ok…similar to buying the cinema ticket using a credit card if you like.

Lets take a look at the alternatives:

1. Free cinema for everyone with the taxpayer footing the bill. Sounds nice but may be critisised as being “unfair” on the poor old taxpayer, many of whom have not had the pleasure of our cinema visit?

2. Force anyone wanting to enter the cinema to enjoy the film to have the hard cash in their hands, eager to hand it over prior to the start of the film. Again this may be critisised as “unfair” as for many people who would love to see the film it would simply not be affordable and they would therefore have to miss out.

3. Let people into the film and then how much they earn over the next 30 years will determine the eventual cost of the entrance for each of the individuals who watch the film. I say this is “unfair”. This is why - the film is the same for everyone - what they choose to do after watching it is their own affair and seeming to punish higher earners with higher tax makes their ticket more expensive than fellow viewers who saw the same film with the same actors, same director, same special effects, seats etc. Under the current system the price of admission is determined by numerous factors such as, costs incurred by the cinema to show the film, level of custom expected and desired level of profits etc. These factors all have comparrsons to the business of higher education provision. How is it fair to charge people different ammounts for exactly the same thing? Answer - it is not.

Anyway, enough of these analogies; lets look at the issue of fairness in more realistic terms:

Lets take a look at a set of quadruplets.

The first, Little Jonny, goes to the unversity down the road and graduates with a first class honours degree in philosophy. Upon completing his course, Little Jonny emigrates to Australia never to be seen on these shores again, goes on to become a multi-millionnaire and never pays tax in the UK in his life and thus no contribution to his university education, which undoubtedly helped to shape his future.

Meanwhile his brother, Little Jimmy, at the same time also graduates from the univeristy down the road with a first class honours degree in philosophy. Jimmy dedicates his working life to low-paid, altruistic charity work, earning these low wages all his working life, thus making no contribution to the cost of his university education that undoubtedly shaped his future. Jimmy would also make no contribution under the current system.

The third brother, Little Joey, takes his first class honours degree in philosophy from the university down the road and becomes a lecturer in the subject at said university. He earns a comfortable lecturers salary that far exceeds the national average and as such is required to pay a higher price through the tax system in recompense for his education. Under the current system Joey would re-pay his debt over a period of time related to the level of his earnings. Once Joey had paid his dues he would be a free man!

The fourth and final brother, David, also with a first class honours degree in philosophy from the university down the road, realises his true calling lies elsewhere and fulfills his life-long amition to be a professional footballer, eventually captaining England to victory in the world cup earning £10million per year and paying his tax accordingly - “that’s loads more than the Prime Minister earns you know!!!” (a phrase I’m sick to the stomach of hearing these days! But that’s another story…). I think even the most liberal and progressive of politicians may have to concede that over many years, poor little David has been disproportionally charged for his time spent studying philosophy at university.

Within this one family we can see that these ideas do not represent fairness in any way! It would be fair if each of the brothers had been charged the same amount for their course and paid off the debt incurred upon starting their working life through the current student loan system.

The rationale behind the proposals for graduate tax implies that a university education is the sole influence on a persons future career and earnings. This is not always be the case as people with the same educational background do not have identical lives, earnings and careers. This is why the income tax system is used in it’s current form. It is the function of income tax, not graduate tax, to fill government coffers with a fair response to individuals’ level of income.

The introduction of this graduate tax will have a negative effect on the decision making process of many prespective university students, and a fear of persecution through the tax system for many years to come may prevail. Graduates that go onto lucrative careers will be disincentivised to fulfill their working life within the UK as they could escape this persecution by taking their skills abroad. Those that always earn low wages would not pay at all and this is also the case under the present system. For those that do stay and earn a modest income, the graduate tax will be an expensive, lengthy and unfair sentence.