Green taxes would need to be carefully designed so as not to hit poor tenants hardest, the Joseph Rowntree Foundation has argued in a new report.

The report said any energy-saving taxes – which have been proposed by environmentalists as an alternative to taxes on income or spending – should be related to ability to pay; otherwise poorer people should be compensated through the benefit system.

The research by the Policy Studies Institute – published this week to coincide with energy efficiency week – concluded that the best energy tax for those on low incomes would be one that reduced council tax on homes if they were insulated.