Chancellor John Healey has been urged to announce a "major" tax switch in the Budget to raise £6billion to fund increased defence spending.
Think tank The Resolution Foundation, which has close links to Labour, has recommended cutting 2p in the pound off national insurance contributions for all workers. Instead, the money lost would be clawed back through increasing income tax by the same amount.
However, because more people pay income tax than national insurance, the overall amount collected would be higher, it says, to the tune of £6billion.
Impact on take-home pay and pensioners
Most employees' take home pay would remain roughly the same, but it would penalise those who have other forms of income, including dividends and landlords with rental properties. It would also potentially mean many retired people could be worse off if they have an income from a private pension or other means.
"That may be controversial," the think tank acknowledged in a new report, "but if major new expenditure is to be funded, then somebody is going to to have to pay for it. Announcing such a move would go a long way to rebuilding confidence in our public expenditure."
It is not the first time the Resolution Foundation has suggested the switch between national insurance and income tax. When the idea was suggested before last year's Budget, there were reports that the Treasury was taking the idea seriously.
Budget constraints and fiscal pressure
Economists say the Chancellor faces a choice between tax hikes and spending cuts - or possibly both - in this month's Budget. The Institute for Fiscal Studies has suggested £35billion will be needed by the end of this parliament.
There have been far fewer leaks in the run-up to this year's Budget - especially compared to 12 months - about what taxes might have to increase. However, Mr Healey is hemmed-in by his pledge to stick to Labour's manifesto pledges to not increase taxes on working people, "which is why we will not increase national insurance, the basic, higher, or additional rates of income tax, or VAT".
Critics have questioned whether previous Chancellor Rachel Reeves' increase in employers' national insurance has already broken that. Adopting the Resolution Foundation's suggested tax switch would likely open Labour up to more criticism.
Yet economists increasingly believe Mr Healey needs to take bold - and potentially unpopular decisions for some - to prove to bond markets that the government has a credible plan to get the public finances in order.
Cost of living support proposals
The Resolution Foundation in its report, called Hitting the Buffers, estimates increased borrowing costs have halved the government fiscal buffer to £12billion, although higher inflation is also expected to offset some of that through more taxes.
Mr Healey is also expected to announce more "breathing space" for households with rising bills. Chief among them is energy, with Ofgem's price cap forecast to jump by 16% to around £2,000 a year in January.
The Resolution Foundation says the Chancellor should avoid wasteful universal support and instead provide targeted help to those struggling to heat their homes. It suggests a new temporary scheme targeted at those with an income of below £24,000 would extend beyond benefit recipients, saving eligible households £175 on average, and cost £2billion overall.
Freezing support for tenants has also created a cost of living crunch for private renters, it says. It suggests restoring the link between local rents and support to help over 900,000 households, at a cost of £2.3billion.
James Smith, chief economist at the Resolution Foundation, said: "The Chancellor may hope to get through the Budget with fresh cost of living support and his fiscal rules intact.
"But to truly stem uncertainty, the Chancellor needs to reassure financial markets that he is willing to face reality rather than duck it by setting out his approach to tax and spend over the remainder of the Parliament."
