Reuters, London

British business organisations criticised Prime Minister Boris Johnson’s plans to increase taxes to pay for health and social care reform, saying they added to the burden on firms struggling due to the Covid-19 pandemic and would cost jobs.

Johnson set out plans on Tuesday to raise taxes on workers, employers and some investors.

The announcement received a cool reception from businesses, who were asked to pay a 1.25 percentage-point increase to a payroll tax known as National Insurance (NI).

“Businesses strongly oppose a rise in national insurance contributions as it will be a drag anchor on jobs growth at an absolutely crucial time,” Suren Thiru, Head of Economics at the British Chambers of Commerce, said.

“This rise will impact the wider economic recovery by landing significant costs on firms when they are already facing a raft of new cost pressures and dampen the entrepreneurial spirit needed to drive the recovery.”

But the government said it was right that businesses should make a contribution given that they benefit from the health and social care system via their employees.

Big businesses would bear the largest burden of the tax rise, Johnson said.