Incentive payments to help states cut COVID taxes are at the centre of a bold budget blueprint from a leading business body.

Victoria's Chamber of Commerce and Industry has told Sky News that Australia is suffering from a 20-year tax reform slumber.

In a submission for May’s federal budget, the VCCI argues the stage three tax cut changes set back the taxation reform agenda.

Chamber CEO Paul Guerra says levies in Victoria are the biggest handbrake and the state government uses them to pay down COVID debt and support mental health reform.

He says the state should receive bonus payments from Canberra to cut those taxes.

Mr Guerra is also calling for nuclear energy and natural gas to be considered as part of the transition to net zero.