Cross-Country Differences in Acceptance of Carbon Tax Rebates

confidence: high · 1 sources

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Working research — not a recommendation.

This page records what the evidence says a policy does, not what anyone should do about it. It has been synthesized from the cited sources but has not been independently reviewed.

What the evidence says

The sources on this page do not compare countries. They are one review, Carattini (2018), which draws on Swiss and British Columbian evidence. The page therefore cannot say how acceptance of carbon tax rebates differs across countries. That absence is a result.

The review describes a distributional mechanism. Low-income households tend to spend less, in absolute terms, on energy than high-income households. A carbon tax paired with lump-sum transfers is therefore likely to be progressive, and low-income households are likely to receive more in compensation than the cost increase they suffer. This is a descriptive argument about revenue-neutral designs, not a measured outcome.

On acceptability, the review reports that the literature finds a positive relationship between progressivity and acceptability, everything else equal. It attributes this to people valuing tax schemes seen as fair that create a lighter burden for low-income households. The evidence is associational. The direction is well established across studies, but the size varies by context and framing.

A Swiss choice experiment with a representative sample of 1,200 voters found that respondents ranked lump-sum transfers and social cushioning as the most favored revenue recycling options. Respondents had been given information on the distributional effects of each design. The review infers that this information let people see the favorable distributional properties of lump-sum transfers, which may not be evident to the general public. The review states this as an inference from the study design. It does not report a direct causal test. How far the result generalizes beyond this setting is unclear.

In British Columbia, poll data show that public support for the carbon tax grew from relatively low support to moderate support. It passed 50% in 2011, three years after the tax was implemented, despite a threefold increase in the tax rate in seven years. These poll data cannot isolate which design features, including rebates, drove the increase.

Where the evidence splits

No contradictions in the current sources.

Thresholds and dose-response

No threshold established in the current sources.

Open empirical questions

Findings

Lump-sum transfers in a revenue-neutral carbon tax are described as giving low-income households more in compensation than their added costs

confidence — direction: highconfidence — magnitude: highconsensus: thin — one descriptive review; no quantified estimate is given on this page
mechanism
low-income households spend less in absolute terms on energy than high-income households, so an equal per-person transfer exceeds their cost increase
effect
progressive distributional outcome; low-income households are likely to receive more than they lose. No magnitude is given.
conditions / moderators
the tax is revenue-neutral and revenue is returned as lump-sum transfers

More progressive tax designs, including rebates and lump-sum transfers, are associated with higher acceptability

confidence — direction: highconfidence — magnitude: mediumconsensus: settled on direction across the literature the review covers; magnitude not established
mechanism
people value schemes perceived as fair that create a lighter burden for low-income households
effect
increases acceptability, everything else equal; no magnitude is stated
conditions / moderators
magnitude varies by context and framing; the evidence is associational

Swiss respondents given distributional information ranked lump-sum transfers and social cushioning as the most favored revenue uses

confidence — direction: highconfidence — magnitude: mediumconsensus: thin — one study, in one country
mechanism
information on distributional effects lets respondents see the favorable distributional properties of lump-sum transfers, which may not otherwise be evident
effect
lump-sum transfers and social cushioning received higher support than environmental earmarking when this information was provided. Rankings only; no percentages are given.
conditions / moderators
a choice experiment with a representative sample of 1,200 Swiss voters, with information on each design's distributional effects; generalization to other contexts is unclear. The mechanism is an inference from the study design, not a direct causal test.

Public support for British Columbia's carbon tax increased after implementation, while the tax rate rose threefold

confidence — direction: highconfidence — magnitude: highconsensus: thin — one jurisdiction, and no link to rebates is shown
mechanism
not established; the poll data cannot isolate which design features, including rebates or social cushioning, drove the change
effect
support grew from relatively low to moderate and passed 50% in 2011, three years after implementation, as reported in Murray and Rivers (2015)
conditions / moderators
the tax rate rose threefold in seven years; the evidence is associational poll data over time