WA's peak business body has warned a tax to big businesses will have a flow-on effect to medium and small businesses, with job cuts predicted.

Responding to the state budget handed down on Thursday, Chamber of Commerce and Industry chief executive Deidre Willmott said the proposed increases to payroll tax for businesses earning more than $100 million a year would cost the state's economy $480 million over four years.

CCI has warned taxing WA's big businesses will have a flow-on effect for small and medium businesses. Credit:Erin Jonasson

"Today's budget will affect jobs and it will stall economic recovery," she said.

"Although [the payroll tax] is aimed at the big end of town and it's limited to five years, businesses have borne a huge share of pain for three or more years in Western Australia and big costs on the big end of town flow through the supply chain to every business in our state.