The Entertainer toy chain said it had been forced to abandon plans to open two new stores after the government said it would increase employers’ National Insurance (NI) contributions.
Chief executive Andrew Murphy told the BBC that higher taxes announced in last week’s Budget meant the company could no longer continue to operate the stores, and it had also imposed a hiring freeze at its head office.
Many companies, including Sainsbury’s and Marks & Spencer, have suggested Labour’s changes to NI could lead to price increases for customers.
“We must make hard choices to repair the country’s foundations,” the Treasury Department said.
Last week, the government announced that from April next year, the employer’s NI rate will rise from 13.8% to 15%. The threshold at which companies start paying tax has been reduced from £9,100 to £5,000.
The move is expected to raise around £25bn a year. Previously, the previous Conservative government twice cut workers’ national income, reducing tax revenue by about £20 billion.
Labor said the rate hike was to “restore much-needed economic stability and allow businesses to thrive”.
Mr Murphy told BBC Radio 4’s Today programme: “The government’s ultimate objectives are indisputable… it’s just a balancing act in their pursuit of those objectives.”
He said The Entertainer, which has 166 stores and employs 2,000 people, selected two new stores and conducted a feasibility assessment on them.
“We were about to start this work and unfortunately the National Insurance changes in particular have tipped the balance so these shops will not be opening now.”
On Thursday, Sainsbury’s chief executive Simon Roberts said the NI changes would add around £140m to costs for the supermarket group.
“I don’t think you can get around the fact that this is going to lead to higher inflation because of changes in everyone’s cost base,” he said.
