Western Australia’s small businesses are threatening to take their expansion plans across the Tasman to New Zealand in an effort to avoid WA’s payroll tax.
In the lead up to the state election the tax is proving to be the sector’s primary gripe.
Ian Blevin, managing director of engineering company Woma Australia, told The West he is investigating expansion options in New Zealand so he could avoid the 5.5 per cent tax on workforce wage bills of $750,000 or above.
The Chamber of Commerce and Industry is calling for the payroll tax threshold to be increased to $1.5 million, in an effort to remove disincentives to growth and help stimulate jobs.
But increasing the threshold would cost the State Government $300 million in lost revenue.
Blevin said the 5.5 per cent tax was often the difference between profit and loss in a small business which operates on small margins.
He said his research is showing it would be just as economical for an engineering firm to service the east coast of Australia from New Zealand as it would from Perth because of the payroll tax.
The tax has already caused Belvin to close one of his two businesses because the combined wages bill put him over the threshold.
The closure of his nursery and landscaping firm resulted in 26 people losing their jobs.
"We had wonderful staff, and we were very reluctant to let them go," he said.
Blevin said he used the proceeds of the sale to build up his engineering business, but the combination of the mining boom and wage inflation has once again pushed him to the edge of the tax threshold.
He is now in the process of considering whether to move to New Zealand.
Neither of the major WA political parties has revealed their payroll tax policies ahead of the March 9 election day.