New Delhi, February 16: With the increasing number of private vehicles posing a threat to the environment, the Centre for Science and Environment (CSE) has asked the government to raise taxes on cars in the forthcoming Union Budget.

In a letter to Finance Minister P Chidambaram, the CSE has also advocated putting in place mandatory fuel economy standards in the automobile sector.

Based on a study on fuel economy in the transport sector, the CSE has said the country can see a worsening energy crisis if fuel efficiency is not ensured in cars.

The study recommends introduction of an environment cess on diesel cars to account for the higher health costs associated with higher toxic emissions from diesel cars.

"We have asked for urgent tax corrections to deal with the energy insecurity. The budget must address the linkage between vehicles and energy security," said Anumita Roychoudhury, Associate director, CSE.

"There is no policy urgency to address deepening of energy insecurity due to rising number of cars supported by tax incentives," she said.

The CSE said the tax should be raised on all cars but government should maintain a differential in favour of small cars and fuel-efficient vehicles.

Diesel cars being 50 per cent more polluting, the study says that manufacturing of these cars without efficiency and clean emissions standards should be stopped immediately.

"Reports indicate that taxes on diesel will be further lowered as an anti-inflationary measure. And this can be detrimental if steps are not taken to restrict the use of diesel for personal vehicles," Roy Choudhury said.

The report also supports increasing incentives for public transport that can reduce both energy and pollution impacts of motorisation.

The transport sector is the single biggest user of oil and oil product, using up around 30 per cent of the total consumption in the country.

As per the expenditure data from the Central Statistical Organisation, between 1993 and 2004, the share of expenses on food has declined while that on transport has increased.