Then people stop buying fuel, and the tax income from fuels taxes dries out, and then the state no longer has the funds to pay those dividents. The state will need to stop paying dividents. Yes, emissions went down (a good thing), but also people's standard of living went down.
Since the alternatives are very close to cost competitive already, that isn't a huge hit if any, and greater economies of scale may even invert it and increase standard of living once they hit critical mass. All the tax does is cause people to have a preference for the new technology over the old one when it would have otherwise been about even.
And by the time the dividend goes to zero because nobody is buying fuel anymore, that also means that nobody is paying the tax anymore either. The only difference is that then every car is electric, which by that point cost about the same or less to own than gasoline cars traditionally did.
It isn't really necessary to ease this in at all if it's used to fund a dividend. Paying $5000 more for gas and electricity is no problem when you get the full $5000 back. All it does is make it cheaper to do something different than you are doing, because then you still get the $5000 but don't have to spend it all -- which is exactly the point.
You might even want to go the other direction in that case -- raise the tax in regions with bad transit, which would also increase the dividend in that region and give people there more incentive to at least buy electric vehicles etc., since they're the region with the highest carbon emissions per capita and most in need of remediation.
> On the packaging of any product (from bottled water over electronics to toothpaste) print the amount of energy used in production and for transportation.
Most people aren't going to care, and the carbon tax should take care of it anyway by making wasteful products cost more.
> Punish producers of goods that break early (e.g. define minimum durability requirements for various product groups).
Same thing there. The combination of "things cost more but you have more money (from the dividend)" causes the market to start to have a preference for durable goods, without actually harming the economy because it always nets to zero.
You really can let the market solve the whole problem just by pricing carbon appropriately. There is no need to micromanage it.