Carbon taxes are a key tool in humanity’s efforts to avoid global warming above 2 C. The idea of a carbon tax is simple: it works by making carbon-intensive activities more expensive, thus encouraging individuals to reduce these activities.
Given the existential threat climate change poses to our societies, one would hope that such a key policy tool was both effective and enjoyed broad public support. Neither of these things are true today. Why is that and what needs to change? My research has sought to address these questions.
The carbon tax is a so-called steering tax. Its goal is to change people’s behaviour, not to raise revenue for the government. However, the current version of the carbon tax in place in Canada and many other countries does not change people’s behaviour as effectively as it could and should. To see why, we consider two frequently ignored facts.
