THE Government has been urged to come down in favour of either petrol or diesel, and not 'sit on the fence' in the fuel debate. Current policy favours unleaded petrol at the pumps through fuel duty, but will favour diesel through the proposed graduated vehicle excise duty and new company car tax regime.

The confusion stems from two environmental aims - to cut carbon dioxide emissions as part of a global commitment to reduce greenhouse gases; and to improve local air quality by reducing emissions of particulates and nitrous oxides.

Steve McManus, assistant director in the Inland Revenue's personal tax division, says: 'The Government would like to see lower CO2 emissions and lower local pollutants, and diesel does not deliver both.' The scientific community had not yet reached a consensus on the 'cleanest' fuel and, until it did, the Government would continue to focus on finding appropriate solutions to the environmental problems it had identified.