The UK government has been urged to reconsider its increase to employer National Insurance contributions before it causes “lasting damage” to the economy in Scotland.
National Insurance contributions for employers are set to rise to 15 per cent from April – however, the Scottish Government estimates it will cost businesses £850 per employee on average.
It was warned the hike would hit the budgets of charities and public sector bodies.
Scottish Government Employment and Investment Minister Tom Arthur said the rise was likely to result in higher prices for consumers and endangered economic growth and described it as a “tax on jobs”.
Speaking ahead of a debate in parliament this week, Arthur said efforts to support businesses and boost investment were “being undermined” by the UK Government’s decision.
“This decision is hitting Scottish businesses hard, reducing their ability to contribute to Scotland’s economy, all while hurting employees’ pay packets.
“Businesses now face the impossible choice of cutting jobs, reducing hours, cutting wages, absorbing the costs themselves or passing some of the burden to consumers in the form of higher prices.
“The First Minister set out a clear plan for growth in his Programme for Government, using the levers at our disposal to support businesses and to attract investment in critical areas like the offshore wind supply chain.
“Yet, our efforts to support businesses, entrepreneurs and investment are being undermined by this tax on jobs. If the UK Government is serious about economic growth, they must reconsider this decision before they cause lasting damage to Scotland’s economy.”
Arthur's statement comes a week after retailers' warning that tax hikes will lead to even more devastating High Street closures and job losses.
Retailers are set to face a "perfect storm of additional costs" as 300,000 jobs will go by 2028 due to the implication of recent budget, stated the new body Retail Jobs Alliance (RJA) representing seven of Britain’s biggest retail chains.
According to the RJA’s analysis, at least one in ten retail workers could leave the sector before 2028, amounting to 300,000 staff.
The retailers are calling for shops to be protected from higher business rates, which are commercial property taxes, saying that this change would provide much-needed relief for at-risk stores, enabling them to reinvest in their businesses, retain staff, and grow their footprint on the High Street.
As well as hitting shops with higher rates, the Chancellor announced a £25billion increase in national insurance and an inflation-busting hike in the minimum wage.
Helen Dickinson, boss of the British Retail Consortium, warned that with Reeves’ Budget adding over £7billion to their bills in 2025, retailers face "difficult decisions about future investment".
Confederation of British Industry chief executive Rain Newton-Smith warned businesses are "seriously flagging under the fiscal burden it had to shoulder at the Budget". She is calling for "decisive action’ that must include ‘fixing our punishing business rates system – fast".
