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12 July 2010updated 27 Sep 2015 2:17am

Raise corporation tax to abolish tuition fees

Business must make its contribution to removing the fear of debt from our education system.

By Sally Hunt

Did New Labour give big business too easy a time? On tax, the answer is a clear yes. The coalition government has inherited lower corporation tax than even the John Major and Margaret Thatcher governments had.

Our company tax rates are lower, too, than those in the US, France, Germany, Japan and Canada. Has this low taxation persuaded business to invest more in its staff? The answer is no. Expenditure on workforce training and education is lower here than elsewhere, as is the proportion of profits allocated to reinvestment in research and development.

Now, while the coalition government tells us all to tighten our belts, it proposes to reduce corporation tax still further. George Osborne’s aim is to give us the lowest profit taxes in the G20, which would deprive the Treasury of £6.4bn a year at a time when new school buildings and free school meals are considered a luxury by Clegg and Cameron.

So why isn’t this a major issue in the Labour leadership elections? Why are candidates not raising public awareness of what amounts to the legal pickpocketing of public-sector workers, students, the unemployed and pensioners in order to fund tax breaks for multinationals?

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The University and College Union (UCU) proposes that, instead of cutting the tax on company profits, we should raise it to that of the average in the G7. This would raise enough money to abolish university tuition fees and give hard-working families an opportunity to get tap in to a better education without fear of debt.

It is not merely an ideological assault on business. A landmark 1997 report concluded that the beneficiaries of higher education should foot the bill. The report identified the three beneficiaries as the student, the state and business. We have seen both fees and top-up fees introduced to squeeze more money out of the student and sustained increases from the state. We have seen nothing from business.

The current debate on higher education funding has been far too narrowly focused on how to try and squeeze more money out the individual student through higher fees or graduate taxes. Our plans are the fairest way to make business, rather than students or taxpayers, pay for the numerous benefits it gets from UK higher education.

Simply raising corporation tax to the G7 average would raise £3.9bn in revenue and would allow the UK to abolish tuition fees altogether. Furthermore, it would not deprive the Treasury of the billions that Osborne’s cuts will.

Access to education is a central driver of social mobility and should be a natural Labour issue. Shifting the balance from individual taxation to a tax on profits is ethical, and would fund public services such as education at a time when cash is short. Yet it would still leave the UK with one of the lowest company tax rates in the G7.

All the polling on student funding shows the country is vehemently against higher university fees, yet the Lib Dems have spectacularly conceded any ground they had gained in the area by reneging on their election commitment to campaign and vote against a rise in fees.

Most of all, for those who aspire to lead Labour, opening up this debate would begin to redress the idea that many people had when the party was in government: that it was on the side of the fat cats, not the people.

Sally Hunt is general secretary of the University and College Union, the largest post-16 education trade union in the world.