A major business lobby has called on the chancellor Rishi Sunak to delay plans for an increase to National Insurance rates.
The tax increase is scheduled to come into effect from April but Make UK is arguing that the implementation of that plan should be delayed until the economy is in a healthier position.
Expectations are that the NI increase will bring in roughly £12 billion as extra tax revenue into the Treasury on an annual basis but policymakers are under growing pressure to shelve their plans for a while at least.
Make UK, which represents over 20,000 businesses within the manufacturing sector, has said that the planned tax rises might discourage companies from hiring new people and could potentially hinder Britain’s wider economic recovery over the course of 2022.
The lobby organisation has cited rising inflation affecting households and companies among the reasons why April would be the wrong moment to introduce any tax increases.
It has also been suggested by Make UK that changing geopolitical dynamics should be taken into consideration by the government as it ponders how best to support the economy and employers within it.
A survey carried out recently by the organisation found that around three in five manufacturing companies take the view that NI increases will have either a moderate or a significant impact on their hiring intentions.
Most of the businesses surveyed also said that they would be likely to pass on the costs associated with any tax rises to their customers.
Chancellor Rishi Sunak and the prime minister Boris Johnson have both insisted that plans for an increase to National Insurance will remain in place in order to help the country as whole recover from the Covid crisis.
However, Stephen Phipson, Make UK’s chief executive, is adamant that the government’s plans ought to change.
“The proposed increase remains illogical and will be even more ill-timed given how circumstances have rapidly changed since it was announced,” he said in a statement.
“The cost burden on business is continuing to escalate and, while some of these increases are due to global events, government must avoid shooting business in the foot by an entirely self-imposed decision,” he added.