The concept of revenue neutral is a system wherein all revenues that accrue to the government from a pricing system are returned to the households and businesses through some mechanism, like tax cuts. That’s where the simplicity ends, though.
Should the cuts be in corporate taxes? income taxes? payroll tax? social security tax?
And how should the amount be determined? Proportionate to the amount paid? a flat fee? If a flat fee should it be to all citizens? to all taxpayers? to all households?
In considering these variables we need to consider what behaviors we want to reward and the many possible unintended consequences. Also we must keep in mind that the revenue will decrease with time. We need a careful assessment of how the government budget will play out as the price on carbon decreases carbon emissions and therefore the revenues.
“Revenue neutral” needs some careful thought.