Some ideas, like vampires, will not die. The graduate tax is such an idea. It cannot be the right solution to a big challenge: how to sustain excellence in UK universities in today's straitened times.
In its purest form, a graduate tax would impose an extra, income-related impost on the incomes of graduates, with proceeds going to universities. Here are a few difficulties. As a tax, it would not cover non-residents and so would shift the burden from emigrants and students who come from the European Union (more than 100,000 a year!) on to those who remained in the UK. It would, presumably, not apply to those who obtained degrees abroad. It would mean that people with identical incomes and circumstances would pay different tax. There is also little reason to expect that any extra money would go to universities. And last, the UK already has a graduate tax, since graduates must be the predominant payers of higher rates of income tax.
Perhaps, the greatest drawback of moving from the current income-contingent repayment of fees towards a graduate tax is that it would again put the allocation of funds under the control of the state. Yet autonomy is the characteristic of all successful institutions. The introduction of fees – Tony Blair's greatest achievement in public service provision – was a first, albeit tentative, step in that direction. The UK should foster competition among universities in the provision of high-quality teaching. The role of government is, then, to act as a bank, funding fees up front and taking repayment after graduates reach a threshold income. This is precisely what the present limited system achieves, though at too low a ceiling on fees, at just £3,000 a year.