Government’s National Insurance tax rise won’t ‘Get Britain Working’
The government’s plans to increase National Insurance (NI) contributions for employers could harm Labour’s aims to increase the number of people in work and improve workers’ finances, say leading audit, tax and business advisory firm, Blick Rothenberg.
Neil Insull, a partner at the firm, said: “To quote the chancellor: ‘to put Britain on a stable economic path….means there will be difficult decisions including taxation. Businesses get that.’”
He added: “Regardless of whether businesses do indeed, ‘get’ the need for this ‘difficult decision’, they will certainly feel any tax rises in the current economic climate.”
Neil said: “We know Ms Reeves won’t increase corporation tax, as she is keen to headline a cap on the corporation tax rate of 25% for the course of this parliament. This leaves her with only one realistic ‘difficult decision’ to make for businesses, an increase in employers NI contributions.”
He added: “However, increasing NI contributions could be counterproductive for Labour’s proposals to improve workers’ finances and increase the number of people in work. Some businesses may have no choice but to avoid taking on new hires, cut pay rises and scale back pensions to reduce their tax burden. Alternatively, businesses could pass those costs on to consumers with higher prices.”
Neil said: “If Labour does want to see more people in work, then they should beware creating what has been called a ‘tax on jobs’ and instead focus on reducing the tax gap and giving HMRC the funding it needs to do this, rather than putting even more pressure on British business.”
