Disclaimer: I do not have a formal education in economics
Here is the idea of my hypothetical policy: graduated over a period, say about 10 years or longer, the income tax is phased out and a carbon tax is implemented, such that the revenue lost from the income tax is gained by the carbon tax.
- Increased consumption
- Increased incentive for the public to invest in renewable energy
- Increasing the weight of the penalty of wasted fuel.
- Reduction of the tax base
- Unequal tax burden on oil companies, and those that rely heavily on oil
- The potential that the graduated increase in carbon tax and decrease in income tax will not be fulfilled (non-cooperation).
Are there any weaknesses, that I, in my limited economic understanding, have overlooked?