Toy store chain Entertainer says it has been forced to abandon plans to open two new stores after the Government announced 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 he could no longer pursue stores and had also frozen hiring at its head office.
A number of businesses, including Sainsbury's and Marks & Spencer, have suggested that Labor's changes to NI could lead to higher prices for customers.
The Treasury said: “We have had to make difficult choices to repair the foundations of the country.”
Last week the government announced that the employer NI rate would rise from 13.8% to 15% from next April. The threshold at which businesses will start paying the tax has been lowered from £9,100 to £5,000.
The move is expected to raise around £25 billion a year. This follows two cuts to NI for workers under the last Conservative government, which reduced tax revenues by around £20 billion.
Labor said the increases were needed to “restore the economic stability we desperately need to allow businesses to thrive”.
Mr Murphy told BBC Radio 4's Today programme: “There is no doubt about the Government's ultimate aims… just the balance with which they have pursued them.”
He said The Entertainer, which has 166 stores and employs 2,000 people, had chosen two new stores and assessed their viability.
“We were about to start work and unfortunately the changes to National Insurance in particular have tipped the scales so these stores will no longer reopen.”
On Thursday, Sainsbury's chief executive Simon Roberts said the changes in NI would add around £140 million in costs to the supermarket group.
He said: “I don't think there's any hiding the fact that, because of changes in everyone's cost base, that's going to translate into higher inflation.”
