Let me be clear from the start: I believe in the necessity of a carbon tax, I'm a carbon tax proponent. What I'm writing about here is carbon taxes implemented in a bad way. I'm far from the first person writing about this, but I think it's important enough to be written about a billion times, we generally need to focus much, much more on how we solve our environmental issues. I've seen the paradox happen up here in Scandinavia, and it's probably happening pretty much everywhere. The government introduces a well meaning tax on, let's say oil. In the beginning it has good effect and gives incentives to move in a more environmentally friendly direction. At the same time the government is earning more money, it feels like a win-win. However, after some time, the government starts to depend on the income from the well meaning taxation to run all sorts of important functions of the government. At this point you basically have a government dependent on money from industries that is wrecking the nature we need to exist in the long run. This dependence on what you're trying to get rid of, is the paradox, and must be avoided at all cost. Some people argue that the carbon tax collected should be given directly to the people. It's an interesting thought, but I don't like that idea either. It would create a dependence in the population for this extra money, and it doesn't lead anywhere but more consumption, making the problem even worse. The money collected from a carbon tax must work benefit us all in the long run too.
There is one way to do carbon tax correctly, and that's for 100% of the carbon tax collected to be invested in initiatives that will lead us away from the carbon economy. If you plant forests, build wind turbines or solar panels from the money collected from the carbon tax, you effectively channel the energy from the oil extraction into building it's replacement. When we're done building the replacement, closing the oil industry won't be needed, it's closing itself by funding the construction of a better alternative. I mean, at the point where everybody is getting their power from renewable energy, and materials from renewable materials, then there won't be no oil industry anymore, it will quickly close down by itself as better alternatives comes around. In this way you carefully close down one business, moving jobs from the oil companies over to the renewable energy sector. This is a win-win.
A carbon tax can't solve all our problems, but it's an important piece of the puzzle, and it's really important to get it right to avoid a paradoxial dependence on our own destruction.