Industry leaders representing the State's 70,000 small businesses have called for a reduction in payroll tax that would free up the equivalent of a part-time wage every year.

Several small business groups converged at State Parliament yesterday to reiterate calls for the payroll tax threshold to rise from $750,000 to $1.5 million.

The groups, led by the Chamber of Commerce and Industry, said raising the size of the payroll before the tax was imposed would save small businesses about $40,000 a year.

They claim this saving, which is equivalent to a part-time wage, would help employers create more jobs across a broad section of the workforce.

The Small Enterprise Network said the payroll tax stifled job creation because some employers refused to hire more staff when their wage bill began to approach the threshold.

SEN chairwoman Nicolle Jenkins said some small business owners were sending contracts offshore in a bid to avoid the tax.

"Make no mistake, this is a tax on jobs," Mrs Jenkins said. "You will find that small businesses will prop up international economies."

CCI chief executive James Pearson said payroll tax was originally targeted at companies with about 23 employees.

But 80 per cent wage inflation over the past decade meant it now affected businesses with less than 10 employees, netting a group of employers who were never meant to be liable for the tax.

CCI revealed yesterday that its calls for reform had fallen on deaf ears in the Labor party, which had ruled out any changes to the tax, which rakes in $3.3 billion a year.

The Coalition has not yet made a commitment on the matter.

The West Australian

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