Rebate schemes haven't fixed the politics of carbon pricing
Based on Matto Mildenberger, Erick Lachapelle, Kathy Harrison and Isabelle Stadelmann-Steffen. 2022. “Limited impacts of carbon tax rebate programs on public support for carbon pricing.” Nature Climate Change.
Efforts to recycle carbon tax revenues to publics in Canada and Switzerland haven’t increased policy support — at least not yet.
The Policy Problem
The politics of carbon taxation remains challenging. Carbon taxes involve visible, short-term policy costs for the public — reflected in higher energy bills and more expensive gas. By contrast, the policy’s benefit - a safe, future climate - only realize over the long-term. In an effort to fix this political economy, advocates argue that carbon tax revenues should be recycled into public rebates. Creating visible, salient, and short-term economic benefits linked to a country’s carbon tax could increase political acceptability. Thus far, two countries globally have implemented national carbon tax and rebate schemes: Canada and Switzerland.
Key Findings and Proposed Solutions
The Canadian and Swiss public remain in the dark about the carbon tax rebates they are receiving: people don’t know about their country’s policy and they underestimate the size of their rebates
When people receive customized information about the actual rebates they have received, their support doesn’t substantially shift; within some groups, receiving this information even generates a backlash
Rebates in Canada and Switzerland have been returned to the public in opaque ways – through a health insurance subsidy in Switzerland and via income tax returns in Canada. Governments need to make these benefits more visible. Follow-up work will test whether there are bigger rebate impacts when the Canadian government transitions to a system of mailing the public cheques in summer 2022.