The Treasury has crushed hopes the UK could slash the amount of VAT tax on recycled products.
Last week MPs put forward the idea as a way to reduce wasting useful resources like metals.
They found in a report only a fraction of British rubbish is being recycled.
A Treasury spokesperson said: “EU VAT agreements do not enable us to introduce a reduced rate of VAT on recycled products.”
In order for recycled products to qualify for a cut-price VAT, they would have to be on an EU list of goods, the Annex III of the principal VAT Directive.
This would need a proposal from the European Commissions and unanimous agreement from EU member states.
Recent talks on the issue suggest this is unlikely.