Multibillionaire iron ore magnate Gina Rinehart has called on the State Government to turn WA into a business utopia by getting rid of payroll tax.

The radical plan would make WA the only jurisdiction in Australia that doesn’t tax businesses for taking on extra staff.

But it would starve the State Government of a vital source of revenue — payroll tax accounts for 38 per cent of the State’s total tax revenue, worth $3.75 billion in 2019-20 — drastically reducing its ability to deliver services to voters.

Mrs Rinehart’s intervention comes after other business leaders last week called on the McGowan Government to reduce WA’s payroll tax burden to help businesses reinvigorate the economy.

WA companies are subjected to payroll tax when their total taxable wages bill exceeds an annual threshold of $850,000, which is one of the lowest in Australia.

Last week, the Queensland Government said it would lift its payroll tax threshold from $1.1 million to $1.3 million to “make it cheaper to run a business in Queensland”.

Premier Mark McGowan has already said it would be “desirable” to reduce payroll tax and would consider it as part of next year’s State Budget, but the Chamber of Commerce and Industry WA says he needs to act sooner.

Wesfarmers chairman Michael Chaney and Satterley Property Group chief executive Nigel Satterley last week called for the payroll tax threshold to be lifted $100,000 to $950,000.

Mrs Rinehart, whose net worth is about $14 billion, told the West Australian that payroll tax creates a disincentive for employers.

“And it makes us less competitive in a primary industries environment where prices are set by international markets,” she said.

WA’S RICH LIST 2019: Our wealthiest 50 people and the stories behind their fortunes

“Abolishing payroll tax, together with government red tape, would drive further investment and employment in WA,” she said.

Hancock Prospecting Group chief executive Garry Korte said: “We currently have the second highest unemployment rate in Australia, isn’t it time this tax which discourages employment, was eliminated?”

Treasurer Ben Wyatt said while he understood there would always be some members of the community who objected to paying tax, “Ms Rinehart’s proposal to abolish payroll tax would take a wrecking ball to the essential services taxpayers expect the Government to provide”.