Conservative plans to reverse the planned rise in National Insurance Contributions (NICs) do not go far enough, according to UK business groups.
The current government has said that NICs will rise by 1% on both employee and employer contributions from April 2011.
However, shadow chancellor George Osborne announced this week the Tories would scrap the rise for employees earning up to £35,000, and bosses would not have to increase NICs for staff earning £20,800 or less.
British Retail Consortium director general, Stephen Robertson, said any increase to National Insurance was a tax on jobs and would undermine retailers' “ability to maintain and create employment”.
He added: “The Conservative proposals to reduce National Insurance payments are a step in the right direction, but should go further by scrapping the full increases.”
David Frost, director general of the British Chambers of Commerce, agreed that the plans are still lacking business focus.
He said: “George Osborne’s commitment to roll back NICs increases for employers is an important step in the right direction. However, the job is not yet done. Despite these positive proposals, companies up and down the country will still face higher costs to keep people in work from April of next year.
“It is nonsensical for any government to ask the private sector to drive economic recovery and create jobs while simultaneously raising direct taxes on employment. To secure the recovery, we must completely eliminate this damaging ‘tax on jobs’.”