Jersey's Chamber of Commerce has claimed that the retail industry is having to help pay for the States' overspend.
There are plans to put the Goods and Services Tax up to 5% in 2011 as part of government plans to balance the books and save £65m by 2013.
Chamber president Ray Shead said some local companies managed to absorb the 3% GST when it was first brought in.
He said the 5% would be hard to cover and so would be passed on to consumers.
He said this in turn would push up the cost of living in Jersey.
Mr Shead said: "Once the government had a relatively easy way, as far as they were concerned, of raising revenue, GST, it was pretty obvious that after the three-year moratorium that it would go up.
"Every 1% increase in GST is another £15m in the treasury's pocket so from their point of view it was a logical step.
"From businesses' point of view it was what we expected, not that we like it."
Plans to raise GST from 3% to 5% were unveiled as part of the 2011 budget.
The island's treasury minister, Senator Philip Ozouf, is proposing the increase from 1 June 2011.
