Revenue Neutral Carbon Taxes seem to be working in British Columbia.
People are using less fossil fuels because, yes, they're more expensive. That's the point. They've found other ways to get things done.
To me it makes sense to use taxes to discourage things you don't like, like excessive carbon usage (and we all have to pay for it down the road; not charging the tax is just kicking the can down the road to the people that are children today). Use tax breaks to encourage things that are good. So don't tax income as much. It's good if you're out making money. You can make estimates and balance the two. People will naturally tend to not spend as much on the things that cost more, even if they'd be even if they kept their usage levels static.