Rachel Reeves was warned in Wednesday's Budget not to impose a “tax death by the thousands” on British businesses.
Confederation of British Industry (CBI) chief Raine Newton-Smith said the government must “change course” and avoid increasing costs for firms.
The Chancellor will raise taxes to plug a black hole in the public finances as she faces the prospect of downgrading the Budget Observer's economic growth forecast for each year of this Parliament.
At the CBI conference in Westminster, Ms Newton-Smith called on Ms Reeves to stand up to Labor supporters and take tough decisions on issues such as welfare cuts.
She said Ms. Reeves had to prove she was committed to economic growth and make difficult choices to achieve it.
“Prove it – against the opposition, against short-term policies, whether it's Social Security, whether it's raising pensions, show the markets that you mean business,” she said.
“Short-term policies lead to long-term decline, and this country cannot afford another decade of stagnation.
“It means making the hard choices to grow now before they get harder, and having the courage to make two hard decisions instead of 20 easier ones.
“Raising the margin to deliver on promises means one or two massive tax hikes, not death by thousands in taxes.”
The scale of the task facing the Chancellor was highlighted by a Sky News report that the Office for Budget Responsibility was lowering its forecast for 2026 and every other year ahead of the next election in 2029.
Ms Reeves has already publicly acknowledged that growth forecasts will be disrupted by the OBR revising its productivity assumptions.
The downgrade and subsequent decline in tax revenue will force Ms. Reeves to raise taxes to balance the balance sheet and create a greater buffer against future shocks than the historically low buffer she had previously given herself.
Seeking additional taxes, it could tax more than 100,000 high-value properties worth more than £2 million and raise £400-450 million, The Times reports.
About 2.4 million properties in the three largest municipal tax brackets will be reassessed to determine which will be subject to the additional tax.
According to the newspaper, people will be able to defer payments until they die or move, so as not to force them to sell their home.
She is also expected to extend the freeze on income tax thresholds, potentially forcing around 1.75 million people to pay more to the Treasury.
The Institute for Fiscal Studies think tank estimates that a two-year extension to the current threshold freeze would mean 960,000 more people would pay income tax, with a further 790,000 forced to move to a higher rate as their wages rise.
