Comment by amalcon

The thing economists generally say to do, is to take the revenue from Pigovian taxes and use it to somehow offset either the original negative externality (e.g. using tobacco taxes to fund public health measures) or anticipated damage caused by the tax itself (e.g. using carbon taxes to fund public transit). In either case, in theory: if nobody pays the tax, then you no longer need the revenue.

Not to imply that economists are uniform on this or necessarily correct, but there has been work done here.