The Minerals Council of Australia (MCA) has stepped up its attack on the Western Australian Nationals' proposed iron ore tax by commissioning a report that has found it would cost 7,200 jobs if it was adopted.

Key points: Grylls dismisses research as "misleading" and refutes job loss figures

Grylls dismisses research as "misleading" and refutes job loss figures MCA says Nationals wanted a "signature policy" without considering economic impact

MCA says Nationals wanted a "signature policy" without considering economic impact Nationals want to up production taxes for BHP Billiton and Rio Tinto

Nationals leader Brendon Grylls wants to hike production taxes for BHP Billiton and Rio Tinto from 25 cents to $5 a tonne, to raise an additional $7.2 billion over four years.

Mr Grylls has dismissed the research by Deloitte Access Economics as "paying for misleading analysis of the policy".

The report, WA Iron Ore Royalty Analysis, found the proposed tax would see the Australian economy eventually shrink by $2.9 billion a year as a result of a tax that raised $2.3 billion.

The research also found the WA economy would be the biggest loser and there would be a 4.3 per cent reduction in employment in the Pilbara.

The gross state product would be 1.1 per cent lower, and there would be 3,400 less WA jobs than would otherwise have been the case, the report found.

"The state hardest hit by the tax would eventually see little benefit from the revenue it raised: over the longer term, Western Australia would ultimately suffer the majority of the economic cost, while receiving only a small share of the benefit from additional government revenues," the report read.

The report also noted the tax ratio paid by the minerals sector was rising not falling, and was close to 50 per cent.

Chief executive of MCA Brendan Pearson said the research showed that after resultant losses in GST, the revenue for WA would be less than $300 million per year.

"In the end it won't raise any extra money for WA because most of the money will end up in other states by virtue of our GST distribution arrangements — it's a net lose-lose for WA," Mr Pearson said.

"In raising all that extra revenue, it will harm one of Western Australia's most important industries, that iron ore sector, and cost jobs in WA itself, so it's really a no-brainer in terms of bad ideas."

Report no resemblance of reality, Nationals say

But Mr Grylls has accused the industry of peddling a misinformation campaign funded by the big miners to avoid paying their fair share to WA.

Brendon Grylls "absolutely refutes" the job loss figures produced in the report. ( ABC News: Andrew O'Connor )

"Normally they don't tell you the parameters they deal with," he said.

"The Minerals Council have got a report from Deloitte to say that the industry will shut down — that's just unbelievable and people will judge it for what it is."

Mr Grylls said when the iron ore price was at $US38 last year the then-Rio Tinto chief executive said jobs, growth and investment were not at risk.

"Today, the price is above $US70 and a report funded by the Minerals Council concludes jobs will be lost. It doesn't stand to reason," Mr Grylls said.

"I would just hope the people of Western Australia see the campaign for what it is, which is based on misinformation and trying to confuse people into not supporting a fair return for the iron ore sector."

Grylls 'absolutely refutes' job loss figures

Mr Pearson rejected Mr Grylls' view the research was biased.

"This is not stitch up — this is a serious economist providing serious input into a debate that requires serious evidence," Mr Pearson said.

"I don't think they gave a lot of thought to the economic impact, all they [WA Nationals] wanted was signature policy to run with."

Mr Grylls "absolutely refutes" the job loss figures produced in the report.

He said jobs were being reintroduced in the Pilbara to try and keep up with record exports.

"There is no capacity to further reduce jobs and continue to deliver the record export tonnage that is going out of the Pilbara ports," Mr Grylls said.

"It's pretty easy from the eastern states to do a desktop report that doesn't have any resemblance of what is the reality of what is on the ground."

Mr Grylls said the softening WA economy did need stimulating, so the increased revenue would be used to fund $440 million worth of payroll tax relief, freeing up cash for businesses to expand, reinvest and hire.