Putting a usage charge on electric cars to make up losses in fuel tax would be "madness" and stunt the take up of the vehicles in NSW, the Electric Vehicle Council says.
The NSW Treasurer on Friday announced a plan to make electric vehicle users pay "a fair and equitable share" for their use of the road.
"You don't want to stifle new technology, but on the other hand it's hardly fair for tradies in utes to pay a tax that someone who can afford a $100,000 hi-tech car does not," Dominic Perrottet told the Australian.
He said the fuel excise tax is currently used to pay for road transport infrastructure, and the income stream would need to be replaced as electric vehicle use grows.
But with electric vehicles currently only making up 0.6 per cent of car sales in Australia, EVC chief executive Behyad Jafari says now is not the time to introduce a tax.
"NSW is already languishing up the back of the pack in the global race toward electric vehicles. Mr Perrottet now wants to blow out our tyres," he said in a statement.
"At this point in our history, when we should be doing everything possible to encourage people to switch to electric vehicles, this tax would be pure poison."
Electric car users actually save the government money, and any future losses in fuel tax could be made up elsewhere, he says.
"If tax is dwindling from one area, governments don't have to make it up from that same area."
"That would be like whacking a new tax on nicotine gum because you're worried about a drop in the tobacco excise. It's madness."
The usage charge on electric vehicles was recommended to Mr Perrottet by a federal financial review he commissioned last year.
"Under the commonwealth government's fuel excise scheme, drivers of older or larger vehicles with higher fuel consumption pay more per kilometre to use the same stretch of road as drivers of newer, smaller, more fuel-efficient vehicles," the review found.
"Further, electric vehicle drivers use the same road at very little cost."
South Australia this week announced it would introduce a charge, which would $1 million each year starting in July 2021.
Mr Perrottet said he would continue speaking with his international counterparts to design a user charge that could be taken up nationally.
The measure won't be included in next week's state budget, but Mr Perrottet will take it to cabinet within a year.