Perth's small business community is threatening to expand to New Zealand instead of Australia in a bid to avoid WA's payroll tax, which has emerged as the sector's No. 1 gripe in the lead-up to the State election.
Ian Blevin, managing director of engineering company Woma Australia, is investigating an expansion to New Zealand where he would not be liable for the 5.5 per cent tax on workforce wage bills $750,000 or more.
He is one of several small businesses warning WA politicians that small business can expand offshore just as easily as mining giants.
The Chamber of Commerce and Industry is calling for the payroll tax threshold to be increased to $1.5 million, claiming the move would remove one of the disincentives to growth and help to stimulate jobs.
Increasing the threshold would cost the State Government $300 million in lost revenue.
Mr Blevin said the 5.5 per cent tax was often the difference between profit and loss at family-run businesses, which tended to operate on small margins.
He said his research showed it would be just as economical for a high-end engineering firm to service the east coast of Australia from New Zealand as it would from Perth because of the payroll tax.
In 2008, Mr Blevin closed one of the two businesses he owned at the time because the combined wages bill for both firms put him over the threshold, which meant he was subjected to the tax.
The business, a nursery and landscaping firm, had employed 26 people, many of them on flexible part-time hours, which meant some parents were able to work while their children were at school.
"We had wonderful staff, and we were very reluctant to let them go," he said. "We continued to hold Christmas parties for the staff for the next three years but we really didn't have much choice because after payroll tax there just wasn't enough profit," he said.
Mr Blevin said he used the proceeds of the sale from to build up his high-end engineering business, which was not as labour intensive.
However, the mining boom and wage inflation had pushed him to the edge of the threshold once again and he was in the process of considering whether to move to New Zealand.
Neither of the big WA political parties have revealed their payroll tax policies for the March 9 poll.