Cr Kendall made the comments during a debate in Monday night's meeting on a motion, later carried, for council to join a campaign to lower the state-level tax in regional areas.

A Wagga area business had asked the council to urge the state government match Victoria's existing policy to cut taxes for businesses that have most of their operations outside its capital city.

Cr Kendall said he would  "go to my grave wondering why we tax businesses for employing people".

"I know governments rely on the income from taxes, but I think there are better ways to tax," he said.

"It's not about having payroll tax at all, but just bringing us into line with the nearest competing state."

Cr Kendall said Wagga had "lost businesses to the northern Victoria provinces because the payroll taxes, in particular, have been significantly less.

"It's therefore a significantly lesser burden on those industries and it makes it much harder for us to compete," he said.

"Wagga is the best placed city in regional Australia in which to locate a business, provided we are on a level playing ground and payroll tax...has caused businesses to locate elsewhere despite Wagga having the best location."

The payroll tax in NSW is 5.45 per cent above a threshold of $850,000 per business while Victoria, after a 50 per cent regional discount, charged 2.425 per cent.

A report to councillors stated that staff received emails from a "local business owner" about the payroll tax impact.

"With 17 fulltime employees, it means a $28,000 per year hit to their bottom line," the report stated.

"They would like to see payroll taxes reduced so they can grow their business and hire more employees

"The business owner also requested to remove, or reduce payroll tax for blue-collar workers that are over 55 years old."

Cr Paul Funnell said one of the conditions for introducing the GST was the removal of payroll tax but that had not happened in any state.

"It's a hell of an impost on business," he said.

Cr Dan Hayes asked Cr Kendall how he could reconcile the council "constantly advocating for more funds from the state government"  while asking for reductions in state taxes. 

Cr Kendall said the NSW state budget was "in significant surplus" from "the sale of assets".

"The vast majority of payroll tax at this stage comes out of Sydney," he said.

Cr Hayes said he was "happy to support" the motion but noted it affected just 10 per cent of businesses in NSW.

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