The public are divided
A recent report on tax rates highlighted how a graduate earning £35,000 a year pays almost double the average tax of someone with the same income from rent on property. However, this finding is predicated on the inclusion of student loan repayments in a graduate’s effective tax rate.
But do student loan repayments actually constitute tax? For many years now they have been collected alongside taxes as deductions from graduates’ payslips, and Martin Lewis has described the new rules introduced this year as effectively constituting a graduate tax.
So what do the public think?
As it turns out, they are divided. YouGov tested two different question wordings, with both getting similar results.
Asking “Do you think that the money that graduates repay from their student loans constitutes 'tax'?” resulted in a very close split, with 36% saying that it does and 38% feeling that it does not. (We will hereafter refer to this question as Question A)
Our other question “Do you think that the money deducted from graduates’ salaries to pay off student loans constitutes 'tax'?” resulted in a slightly wider difference, with 36% again saying that it does but 42% answering that it does not. (We will hereafter refer to this question as Question B)
Graduates feel differently on the matter to non-graduates. Depending on the question asked, 52-54% of Britons with a degree say that student loan repayments do count as tax, compared to 33-35% who disagree.
By contrast, among non-graduates, there is a tendency to think that student loan repayments are not the same as tax, by 39% to 28% in Question A and 46% to 28% in Question B.