Carbon tax acceptability with information provision and mixed revenue uses

Abstract

Public acceptability of carbon taxation depends on its revenue use. Which single or mixed revenue use is most appropriate, and which perceptions of policy effectiveness and fairness explain this, remains unclear. It is, moreover, uncertain how people's prior knowledge about carbon taxation affects policy acceptability. Here we conduct a survey experiment to test how distinct revenue uses, prior knowledge, and information provision about the functioning of carbon taxation affect policy perceptions and acceptability. We show that spending revenues on climate projects maximises acceptability as well as perceived fairness and effectiveness. A mix of different revenue uses is also popular, notably compensating low-income households and funding climate projects. In addition, we find that providing information about carbon taxation increases acceptability for unspecified revenue use and for people with more prior tax knowledge. Furthermore, policy acceptability is more strongly related to perceived fairness than to perceived effectiveness.

Fig. 1. Construction of, and relation between, assessed and self-perceived knowledge.

a Items used to assess knowledge about a carbon tax and their response distribution (correct answers in capital letters in brackets); b distribution of assessed knowledge; c distribution of self-perceived knowledge; d rank correlation with a 2D-density plot of self-perceived versus assessed knowledge, illustrating where most observations are concentrated. The rank correlation between assessed and self-perceived knowledge is 0.33 and significant at 1% level. The red line in the right plot indicates a fitted linear model.

Fig. 2. Assessed and self-perceived knowledge for different levels of carbon-tax acceptability.

Data are presented as mean values with error bars representing +/−2 s.e. Acceptability is measured on a 5-point scale ranging from 1 = completely unacceptable to 5 = completely acceptable. The red line in the right plot indicates a fitted linear model. Subgroups sizes are: N = 382 for acceptability level 1, N = 374 for acceptability level 2, N = 387 for acceptability level 3, N = 589 for acceptability level 4, and N = 272 for acceptability level 5.

Fig. 3. Relationship between assessed knowledge and acceptability of a carbon tax with and without information provision, for unspecified revenue use.

Results include averages and error bars depicting +/−2 s.e. Acceptability is measured on a 5-point scale: 1 = completely unacceptable to 5 = completely acceptable. At the bottom are p-values of a Kruskal–Wallis rank-sum test with Bonferroni correction for statistical differences between the two subsamples. Subgroup sizes are: N = 353 for assessed knowledge equalling 0, N = 256 for assessed knowledge equalling 1, N = 488 for assessed knowledge equalling 2, N = 600 for assessed knowledge equalling 3, N = 264 for assessed knowledge equalling 4, and N = 43 for assessed knowledge equalling 5.

Fig. 4. Effect of providing information on acceptability and perceptions under distinct revenue uses.

Dots indicate the average results with error bars indicating +/−2 s.e. All survey questions were using a 5-point scale (e.g. acceptability: 1 = completely unacceptable to 5 = completely acceptable). N = 2004 (1000 with no information provided and 1004 with information provided) for each revenue use option and for acceptability and each of the four perceptions.

Fig. 5. Preferred allocation of revenues from a carbon tax.

Respondents were asked to express the share (in %) of total revenues to be allocated to each revenue use. The left chart is for all respondents, while the right and central charts are for respondents who initially accepted or did not accept a carbon tax before any revenue use was specified. The coloured parts of each bar indicate average shares. Respondents with high (low) acceptability are defined as having a response of higher (lower) than 3 (on a scale from 1 to 5). Respondents who chose the median (3) option were excluded from the centre and right plots of the figure.