The impact of compensatory measures on public support for carbon taxation: an experimental study in Sweden

Abstract

This study aims at better understanding how, and to what extent, perceptions of a policy instrument's distributional effects impact on policy support, focusing on the case of CO 2 taxes on petrol in Sweden. Through a large-scale (N = 5000) randomized survey experiment with a 2 × 3 factorial design, the extent to which perceptions of fairness determine attitudes to a suggested increase of the Swedish CO 2 tax is explored. Furthermore, the study considers whether these effects change with the level of the suggested tax increase, as well as whether negative sentiments can be alleviated by combining it with a compensatory measure in the shape of a simultaneous income tax cut financed by the revenues from the tax increase. The results show that a higher tax increase is both viewed as more unfair and enjoys weaker support. Furthermore, compensatory measures can be a powerful policy design tool to increase perceptions of the policy as fair, but the effect of compensation on policy support is conditioned by the individual's leftright ideological position. Whereas people self-identifying to the right react favourably to compensatory measures, people self-identifying to the left become less supportive of a tax increase when combined with a simultaneous cut in income taxes. Key policy insights. Perceptions of fairness are highly important for explaining public support for climate policy tools, specifically CO 2 taxes. . Compensatory measures can be a powerful policy design tool to increase perceptions of the policy as less unfair. . However, the effect of compensatory measures on policy support is conditioned by ideological position, and only successful among people to the ideological right. . In contexts dominated by right-wing ideals, a combination of a tax and a compensatory scheme may be a successful route forward towards increased climate policy support. . In left-oriented contexts the results imply that a CO 2 tax without compensation seems more likely to increase support.ARTICLE HISTORY

How do social class position and party preference influence support for fossil fuel taxation in Nordic countries?

“…Although the popularity of carbon taxation could be increased by compensating increased costs with income redistribution (Callan et al, 2009;Hsu, 2016;Jagers et al, 2019) or by providing information about the positive effects of carbon taxation (Carattini et al, 2017), the fear of rising costs is likely to decrease the support for increasing energy taxation. This applies especially to people who do not consider climate change to be a major risk (Frondel et al, 2017).…”

The significance of political culture, economic context and instrument type for climate policy support: a cross-national study

“…In addition, a number of studies point towards public suspicion that carbon taxes will not effectively discourage high-carbon behaviour (Hsu, Walters, & Purgas, 2008;Kallbekken & Saelen, 2011;Steg, Dreijerink, & Abrahamse, 2006) as well as a concern that the purpose of introducing a carbon tax is primarily to increase government revenues, rather than to positively impact the climate (Klok, Larsen, Dahl, & Hansen, 2006). These and other studies all highlight the significance of policy design for increasing support for CO 2 taxes, in terms of the tax rate itself, revenue use, and combining the tax with other measures (see Bento, Franco, & Kaffine, 2009;Dresner, Dunne, Clinch, & Beuermann, 2006;Eriksson, Garvill, & Nordlund, 2008;Hammar & Jagers, 2006;Hsu et al, 2008;Jagers, Martinsson, & Matti, 2018;Sumner, Bird, & Dobos, 2011). Here, we acknowledge the possible effect of policy-specific beliefs on policy attitudes, both as a CO 2 tax might be perceived to have direct negative consequences for the economy of the country (and thus for the citizens of that country), and since the economic consequences might be perceived as affecting the own country more than other comparable economies.…”

Could revenue recycling make effective carbon taxation politically feasible?

“…Initial research in this vein has revealed the willingness of U.S. citizens to accept carbon taxes ( 17 ). Jagers et al ( 11 ) showed that Swedish citizens are more likely to accept a carbon tax on car fuel if combined with an income tax cut. Carattini et al ( 18 ) found that Swiss citizens are more likely to support energy taxes when revenue recycling is included.…”