Green taxes are seen as revenue-raisers rather than efforts to reduce pollution, the environmental audit committee said
The Treasury should ringfence money from fuel duty to cut rising public transport fares in a bid to rebuild trust in green taxes, MPs urged on Thursday.
The public has lost trust in green taxation because the Treasury appears to use it as a revenue-raiser rather than an effort to reduce pollution, the environmental audit committee said.
Recent government budgets had created the perception that taxes on things such as flights and fuel were "simply being used to pinch extra pennies from people," the committee's chairwoman Joan Walley said.
In a report on this year's budget and environmental taxes, the committee said the Treasury should ringfence some of the revenues from green taxation to invest in less-polluting alternatives.
For example, funding raised from fuel duty should go towards lower bus and train fares.
Green taxation "cannot be all stick and no carrots", the report said.
The committee warned that green taxes needed to be straightforward and send a clear signal about behaviour to consumers, as well as be fair in order to build support for the measures.
The committee said the Treasury needed a coherent strategy for environmental taxation and that ministers should be looking to shift taxes from things that help society such as jobs and incomes, to things which are harmful such as pollution.
The MPs criticised the announcement in the most recent budget to cut a penny from fuel duty, in the face of rising petrol prices, while providing no new incentives for switching to low-carbon alternatives such as electric cars.
They also said the proposed changes to air passenger duty ? the tax paid by people when they fly ? will not make it a more effective environmental levy or cut emissions.
Walley said: "The Treasury needs to stop giving green taxes a bad name.
"Recent budgets have created the perception that environmental taxes are simply being used to pinch extra pennies from people.
"Politicians should use green taxes more carefully to challenge and change the most polluting activities."
She said the government should put its money where its mouth was by greening the economy at the heart of plans for growth.
"Green taxes shouldn't be seen as some kind of add-on or used as a revenue-raising trick ? they should form an integral part of the government's plans to revive the economy.
"The Treasury should start to rebuild trust in environmental taxes by ringfencing some of the revenues raised from fuel duty to cut soaring train and bus fares," she added.
The report, which examined the environmental impact of this year's budget, also said the Treasury's decision to prevent the proposed green investment bank from borrowing would limit its impact on boosting renewables and greening homes.
It criticised the government's definition of subsidies for nuclear power, warning new reactors would effectively be subsidised.
It also said the "plan for growth", published alongside the budget, did not provide the step change needed to shift the UK to a green economy ? and in some areas, such as watering down the definition of "zero-carbon homes" which must be built from 2016, ministers have taken a step backwards.
Campaign for Better Transport's sustainable transport campaigner, Sian Berry, said: "A decade ago Gordon Brown promised that future increases in fuel duty would be ring-fenced for modernising transport. Unfortunately this was never put into effect.
"The coalition government should learn from this and commit to using increases in revenue from fuel duty as part of a wider package of measures to provide real choices in transport.
"The government should be helping people to switch away from environmentally damaging behaviour, but by actively raising train fares and cutting support for bus services, the government is doing exactly the opposite."
Friends of the Earth's senior economy campaigner, Simon Bullock, said: "The Treasury has consistently failed to play its part in tackling climate change ? and its cack-handed approach to green taxation is little surprise.
"David Cameron must show real leadership by pushing the Treasury to lay the foundations for a low-carbon economy and ensure we all benefit from a green, safe future."
AA president Edmund King said: "The government was right to cut fuel duty when pump prices were at record highs rather than pretend that fuel duty is a green tax. Drivers are responding to fuel prices by driving less and selecting more economical cars, rather than responding to a green smokescreen.
"With recession and record fuel prices causing a significant reduction in fuel consumption by cars, there is leeway for government to review how drivers can be encouraged to reduce their CO2 emissions without declaring war on them."
A Treasury spokesman said: "The government is committed to being the greenest government ever, as seen by actions at budget and the plans to set environmental taxes in a clear and accountable framework.
"The government welcomes the committee's report and will respond to its recommendations in due course.
"As stated by the chancellor at budget, environmental tax policy is being developed in a way that takes account of all possible levers so that carbon reduction is done in the most effective way and takes account of wider priorities such as sustainable growth and sound public finances."
Source: http://www.guardian.co.uk/environment/2011/jul/07/green-taxes-public-transport-fares
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