revenue neutral means there is no incentive to reduce usage.
Again, when the government says revenue neutral, it means it only on a mass scale, not on an individual scale.
Plus, as people and cities adapt to the new reality, it would gradually become revenue negative as people plan to pay less.
On the plus side though, public transit would become more efficient and so depend less on subsidies and fewer highways would be needed as there would be fewer cars on the road.
So less revenue, but less expenditure too.
Of course you can't have it both ways.
The whole point is to incentvize low carbon alternatives and if we don't make the effort, then you lose the reward from that incentive.
That means that if you introduce a carbon tax, this would pressure cities to eliminate many of their anti-high-density-development bylaws or they would soon become unaffordable and people would move out of town or insist on higher wages, pushing inflation up.
I personally think putting such pressure on such cities would be a good thing by forcing them to give their heads a shake.
It would kill NIMBYism in a heartbeat when it comes to high-density development.
Honestly, geographically large low-density cities far from farmland would suffer the most from a carbon tax, while geographically small high-density towns surrounded by farmland would likely boom in such an environment due to lower income tax and GST combined with an already carbon efficient urban infrastructure.
A city like Ottawa would likely suffer more than any other city in Canada. Then again, that might be a good thing to smarten it up a bit.