Designed to endure: Insights into the resilience of carbon tax policies

The following research is intended to provide insights that can help to guide government decision-makers in designing carbon tax policies for continuity or resilience. It provides an overview of carbon tax policies in the Republic of Ireland, the Province of British Columbia (Canada), and in Australia. A comparative analysis juxtaposes technical design decisions and political factors in each of the case studies presented. This analysis is used to outline key considerations to be deliberately applied by policy makers during the process of designing and maintaining a carbon tax. Conscious consideration and application of these insights have the potential to improve the continuity and resilience of carbon tax policies. Some key strategies appear to promote resilience. The research suggests that revenue neutrality and a gradual phase-in approach to the tax rate are important components of a politically resilient carbon tax. In addition, policy-makers should not aim to spread costs and benefits too thinly in their design of exemptions and in the setting of rates. Certain industries or groups will lose under a carbon tax; this is inevitable. Trying to spread the "pain" too widely will likely create a powerful coalition against the policy, and weaken the likelihood of continuity or resilience.