Higher employment costs for companies resulting from the payroll tax increase announced in Friday's Budget are likely to result in higher prices for consumers, according to one prominent local boss.

Charles Gosling, managing director of beverage company Gosling's, said the one percentage point rise in the employee's share of payroll tax leaves staff facing an increase of a whopping 21 percent in their contributions.

Mr. Gosling, who is also the Mayor of Hamilton, gave an example of how it would affect the average working person.

"The median Bermuda income is around $55,000," Mr. Gosling said.

"That means the average employee is giving up an extra $550 of their salary to Government.

"While the employee does not pay the one percent extra that the employer is now obligated to pay - a nine percent increase - it does impact the employer's labour costs and makes them less able to compensate or compete.

"And who pays for Government's imposed increase in labour costs? The consumer."