"The Business Council calls on the WA Nationals to abandon its ill-considered proposal for a discriminatory tax on BHP and Rio Tinto," Chief Executive Jennifer Westacott said.
"Predictable tax and regulatory arrangements are critical for Australia's investment competitiveness and business confidence," Ms Westacott said.
"The proposal to impose a $5 per tonne iron ore tax on BHP and Rio Tinto could undermine confidence in the predictability and competitiveness of investment arrangements in Australia.
"Australia should be on a trajectory towards lower business taxes to ensure we remain globally competitive for investment in order to continue driving jobs and a stronger economy.
"BHP and Rio Tinto have been Australia's largest taxpayers in recent years - there are no grounds for an added impost on these two companies.
"Both BHP and Rio Tinto have invested many billions of dollars over the past 50 years developing Australia's iron ore industry. This has generated great wealth for all Australians.
"Mining has been so important to regional communities, many of which are feeling the pinch of a downturn in the economy.
"Why would you risk deterring more investment in these communities and adding to costs, which could come at the expense of jobs?" she said.