A HIKE in National Insurance contributions is set to cost Brits an extra £255 a year in taxes.
The rise, planned to hit in April this year, risks driving up inflation with the cost of living already on the rise and household bills skyrocketing.
The planned 1.25 percentage point increase applies to all employers – with fears consumers will be left with rising bills.
According to The Telegraph, the Treasury committee says in its report: “The Office for Budget Responsibility forecast states that the policy mix chosen by the Chancellor at this Budget will act as a boost to inflation.
“And it identified in particular the increase in employer National Insurance Contributions, (NICs) and the large fiscal loosening that took place in the Spending Review.”
The committee, chaired by Mel Stride, a Tory MP and former Treasury minister, warned Boris Johnson and Rishi Sunak that the hikes could force the Bank of England to raise interest rates again.
And in its report on the Budget last October, Mr Johnson was warned driving up salaries risks a “wage price spiral”.
The report adds: “The Chancellor showed in his speech that he is alert to the fiscal risks of higher inflation and higher interest rates becoming entrenched.
“The Treasury should keep these risks at the forefront of their thinking when designing policies at future fiscal events.
“The Chancellor has stated his ambition to cut taxes before the end of the parliament. In October, there was little room for manoeuvre, but there has been positive news from the public finances since then.
“While further good news may help him achieve this ambition, significant risks remain, most notably from the impact of inflation.”