Treasury accused of undermining support for environmental taxes after refusing to transfer revenues.
Ministers have ignored calls to divert fuel duty revenue to local transport improvements to encourage motorists to use low-carbon alternatives.
The environmental audit committee made the recommendation last year, suggesting ministers were undermining support for green taxes by making them too complex.
But the Treasury this week responded by claiming fuel duty was not an environmental tax, because it was not introduced to change behaviour.
That position contradicts the view held by the Government’s own Office for National Statistics, which stated last June that the Treasury had received £41.4bn in environmental taxes in 2010, of which £5.7bn came from fuel duty.
According to the Treasury, the primary role of transport taxation was to 'contribute to the sustainability of the public finances'.
Ministers also failed to define what they meant by an environmental tax. Committee chair, Joan Walley, said that without a clear strategy, the Government would appear to be using green taxes 'as a revenue-raising tool rather than a serious attempt to change environmentally-damaging behaviour'.
A spokesman for the Local Government Technical Advisers’ Group (LGTAG) said ministers had to do more to 'level the playing field' when it came to transport taxes.
'The Treasury has always been loath to hypothecating any taxes or, indeed, fines or penalties,' he told Surveyor. 'Going greener with our taxes would certainly be welcomed by TAG. One that we would welcome is levelling the playing field on the work commute.
'A good example is a workplace parking space given to staff [which] is a tax-free good, but subsidies given by employers to bus or train fares are taxable. This is effectively a subsidy to staff to commute by car – usually of a value upwards of £3 a day.'
The Government's environment and transport tax policy is guided by three of the Treasury's strategic objectives – protecting the environment in an economically-efficient and sustainable way; maintaining sound public finances; and promoting efficiency and fairness of the tax system.
In an appearance in front of the committee last week, economic secretary, Chloe Smith, told MPs work was still under way to determine a definition and ‘explore the opportunities to go greener within our taxes'.
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