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SYDNEY, Oct 4 (Reuters) - Mining giants Rio Tinto and BHP Billiton on Tuesday rebuffed proposals to replace one of the taxes they must pay on their iron ore businesses in the state of Western Australia with annual upfront payments.
Both companies mine most of their iron ore in the state, which is forecast to post a A$3.9 billion ($3 billion) budget deficit this year.
The steelmaking raw ingredient is Australia's biggest export earner, although the industry has been hit hard as the economy slows in top consumer China.
West Australian state Premier Colin Barnett said he had held discussions with the two miners about scrapping a A$0.25 cents per tonne levy in favour of yearly upfront payments of an undisclosed sum, but would not act without their consent.
"We are looking at that 25 cent fee because it is an anomaly," Barnett told reporters in Perth. The discussions follow repeated calls by some politicians to lift the levy twenty-fold to A$5 per tonne.
Such steps would not affect another 7.5 percent iron ore revenue tax the companies must pay.
A Rio Tinto spokesman said the firm would not take up the offer.
"Since 2006 the company has paid A$13 billion in royalties to the Western Australia government," the spokesman said.
BHP would not accept the offer either, said a spokeswoman.
BHP last month said a proposed $5 per tonne tax on iron ore could threaten future investment decisions in Western Australia, where it expects to mine up to 275 million tonnes of iron ore this year. ($1 = 1.3048 Australian dollars) (Reporting by James Regan; Editing by Joseph Radford)