You’d absolutely need to do both, unless you wanted all sorts of malformed incentives.
Generally speaking, the revenue from a pigouvian tax needs to be spent mitigating the problem that generates the revenue. Otherwise, you end up with something of a Cobra Problem, wherein excess consumption is seen as a revenue driver that the state subtly promotes.
Isn’t this article about UK?
I’m just speaking from personal experience.
If you want to talk shit about the UK, you can always point to HS2. Cancelled out of spite by the outgoing Conservative government. Chronic mismanagement of the rail network has been a lead weight around the British economy for decades.
Why not both?
Isn’t this article about UK?
You’d absolutely need to do both, unless you wanted all sorts of malformed incentives.
Generally speaking, the revenue from a pigouvian tax needs to be spent mitigating the problem that generates the revenue. Otherwise, you end up with something of a Cobra Problem, wherein excess consumption is seen as a revenue driver that the state subtly promotes.
I’m just speaking from personal experience.
If you want to talk shit about the UK, you can always point to HS2. Cancelled out of spite by the outgoing Conservative government. Chronic mismanagement of the rail network has been a lead weight around the British economy for decades.