One of Australia’s most senior business leaders says payroll tax is a “dud tax” that kills jobs but has backed efforts by WA Treasurer Ben Wyatt to fix a legacy of “profligacy”.

With modelling showing the State Government’s payroll tax increase on WA’s biggest employers will cost at least 1300 jobs and lead to further wage freezes, Wesfarmers chief executive Richard Goyder lamented the effect it would have on the company.

But Mr Goyder, who steps down in November, offered qualified support for attempts to repair the State’s finances, saying the former Barnett government had spent too much money.

Wesfarmers, which owns retail giants including Coles and Bunnings, is WA’s biggest payroll tax contributor, paying about $60 million a year.

In a move the Government says will raise $435 million, firms with payrolls of between $100 million and $1.5 billion will pay a tax rate of 6 per cent and those with a payroll of more than $1.5 billion will face a 6.5 per cent tax rate.

The WA Chamber of Commerce and Industry said the changes would hurt a fragile employment market, costing jobs and slowing wages growth.

It wants Mr Wyatt to offset the increase by lifting the payroll tax threshold to $950,000 from $850,000 in a move it believes would create up to 900 jobs. Mr Goyder said the cost to Wesfarmers would be about $10 million a year, which would inevitably be passed on in the form of fewer jobs or higher prices.

He called on Mr Wyatt to stick to his promise of limiting the increase to the next five years.

“Do I like the impost for another five years at least of increased payroll tax?” Mr Goyder said. “I hate it. I reckon payroll tax is a dud tax.”

Despite his misgivings, Mr Goyder said it was imperative the Government “live within its means” and he sympathised with Mr Wyatt’s desire to ensure no one sector was singled out.

He blasted the previous government’s record of fiscal management, saying it knew GST receipts would fall but failed to cut its spending.

“It’s not as if Treasury people in WA didn’t know what was coming because it was pretty well forecast,” he said.

“So, to me, it just doesn’t cut it that the deficit is a result of GST. The deficit is a result of government spending too much money.

“It would be nicely fixed if we got more in GST payments, but they knew what was coming.

“It’s a bit like a home-owner saying ‘I’d love to win lotto and I’m going to spend money based on winning lotto but I know how much income I’ve got, oh bugger it, I’ll just go and spend based on the off-chance I’m going to win’.

“It’s not going to happen.”