The Australian Industry Group chief executive Innes Willox says states should hold off taxing electric vehicles until they are better established.
A leading business lobby group says Australian governments should be supporting businesses and individuals to buy electric vehicles rather than slapping taxes on them.
Mr Willox says new taxes on electric vehicle usage that are being developed in several states, is putting "the cart before the horse.”
He believes such taxes should not be implemented until clean vehicles are better established, and the taxes are better designed.
In states such as Victoria, electric vehicle charging stations have been established in locations such as Nhill, to encourage electric vehicle owners to travel to the state's regions.
Mr Willox said:
"Road infrastructure needs to be paid for and it will be important in the long term to maintain the tax base, as batteries and fuel cells replace petrol tanks in Australia's vehicle fleet.
"But Australia is currently well behind our peers in that transition."
According to a YouGov poll in Europe, 63 per cent of metropolitan residents support the idea that within a decade, only emission-free cars should be sold in Europe.
European city favour a continental phase-out of combustion engine car sales from 2030, to reduce emissions.
The poll of 10,050 respondents, surveyed people last month in 15 cities, including London, Warsaw and Budapest.
Transport Environment senior vehicles director, Julia Poliscanova said:
"People in cities are the most exposed to toxic levels of air pollution, and they don't want internal combustion engines to be sold for any longer than is necessary."
Britain, which is no longer an EU member, will ban sales of new petrol and diesel cars and vans in 2030.
Mr Willox said Australia’s slow uptake of clean vehicles is holding back national progress towards emissions targets and increasing the pressure on every other part of the economy, according to Willox.
Willox said all sides of politics have the opportunity to develop coherent, and nationally coordinated incentives, consistent with overall plans for achieving a net-zero emissions economy by 2050.
But he said unfortunately the most advanced tax proposal is due to start in Victoria on July 1 and looks like being a major disincentive that would undermine any other supportive policies:
"Victoria and the rest of the states should slam the brakes on these taxes and spend the next several years working together with the Commonwealth on a solution that is roadworthy."