PRESS ASSOCIATION - The Treasury should ring-fence money from fuel duty to cut rising public transport fares in a bid to rebuild trust in green taxes, MPs have urged.

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, said the Environmental Audit Committee.

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", said the committee's chairwoman Joan Walley.

In a report on this year's budget and environmental taxes, the committee said the Treasury should ring-fence 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 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.

Ms Walley said: "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 ring-fencing some of the revenues raised from fuel duty to cut soaring train and bus fares."

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. And it criticised the Government's definition of subsidies for nuclear power, warning new reactors would effectively be subsidised.

Sian Berry, of the Campaign for Better Transport, 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."

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."