Impact of cost transparency and mixed revenue use on the maximum acceptable carbon tax

The two experimental factors were:</p><ol><li><b>Revenue Recycling:</b></li><li><ul><li><i>Single-use</i>: respondents allocate revenues to one purpose only.</li><li><i>Mixed-use</i>: respondents freely distribute revenues across twelve policy areas (e.g., public transport, rebates, climate projects).</li></ul></li><li><b>Cost Transparency:</b></li><li><ul><li><i>Control</i>: carbon tax increases shown only in €/tCO₂.</li><li><i>Transparency treatment</i>: the same increases additionally shown as <b>fuel-price equivalents</b> (€/liter of gasoline), making costs more intuitive.</li></ul></li></ol><p dir="ltr">Participants then indicated the <b>maximum carbon tax increase</b> they would accept using a payment card method.</p><p dir="ltr">The findings show that citizens make meaningful use of mixed revenue options and diversify spending across causes, but <b>mixed-use does not increase tax acceptability</b>.

By contrast, <b>cost transparency significantly and robustly increases the maximum acceptable carbon tax</b>, suggesting that clear, intuitive communication about costs can strengthen public acceptability. Contrary to expectations, transparency does <i>not</i> primarily help those who overestimate costs. Instead, it seems to work through two mechanisms:<br>(1) <i>confirming</i> correct beliefs about cost levels, and<br>(2) <i>correcting</i> inflated cost perceptions among overestimators.</p><p dir="ltr"><br></p><p dir="ltr">Overall, the study offers new insights into how communication and policy design can improve the political feasibility of carbon taxation.

While mixing revenue uses does not raise public acceptability directly, cost transparency emerges as a powerful and low-risk tool for enhancing legitimacy and acceptability of ambitious climate policy.</p>