Firms have called on the Government to scrap the
planned "damaging" increase in National Insurance Contributions and
raise value added tax instead.

The British Chambers of Commerce latest monthly survey, which includes data from Kent businesses, found that 41 per cent believe an incoming Government should make reducing the budget deficit its number one priority. This would include freezing public sector wages and reforming public sector pensions. But it would also involve a mixture of spending cuts and tax rises.

Businesses said that the NIC increase would be the most damaging
tax rise, with only six per cent thinking it the lease damaging
option.

The BCC claims that raising Vat by just one per cent to 18.5 per
cent would bring in an extra £4.5bn. The one per cent hike in NI,
planned for 2011, would raise a similar sum of £5.1bn.

David Frost, BCC director general, said: "The message from
business is clear. After an election, we have to get a serious grip
on the country's public finances and escalating debt. Cutting the
deficit means making tough decisions on spending, like freezing the
public sector wage bill and reforming public sector pensions.

"Raising a damaging tax on business, like NICs, will be
counter-productive. It will mean fewer jobs and less tax revenue in
the long-term. While businesses fully understand the need to bring
down the UK's deficit, they are clearly saying that using Vat would
be a less damaging way to achieve this.

"So let's scrap the NIC's "tax on jobs" and offset it with a one
per cent Vat increase. It's a tough call, but we have to be
realistic about repairing the public finances, and promoting
recovery."

The survey also found that just over a fifth - 22 per cent
- want red tape slashed, while 13 per cent argue that the focus
should be on making the UK's tax system more competitive.