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Proposed increase in National Insurance Contributions is a tax on jobs, say business groups

UK business groups have joined forces to call for the proposed 1% increase in National Insurance Contributions (NIC) to be scrapped.

An online petition has already been signed by the leaders of the coalition that includes the British Chambers of Commerce (BCC), British Retail Consortium, Confederation of British Industry (CBI), CIPD, Forum of Private Business, Federation of Small Businesses (FSB), Institute of Directors (IOD), and the Recruitment Employment Confederation (REC).

The petition reads: "We, the undersigned, call upon the Government to reverse the one percentage-point employer National Insurance Contributions increase planned for April 2011.

"Businesses across the country know that it is imperative for the Government to begin the difficult job of repairing the public finances. But this NICs increase is a ‘tax on jobs' - and will discourage companies of all sizes from taking on new staff at a critical point in our economic recovery.

"We urge the Government to work with business groups to find alternative ways to close the UK's budget deficit - beginning with a credible plan to reduce inefficiency in public- sector spending. Any government has to realise that additional taxes on businesses, especially small-and medium-sized companies, must be a last resort, not an easy way forward.

"The respected and independent Institute for Fiscal Studies has commented that ‘employer [NI] contributions bear no relation to benefits provided under the NI scheme. These contributions are in effect simply a payroll tax.' From our perspective, further rises in NI mean fewer jobs, more people signing on, and a slower recovery for UK plc.

"The case is clear. No NICs increase - no tax on jobs."