Is this a bad thing? Is saying "we'll give you $5000 off your taxes if you buy a hybrid car" worse than saying "we'll throw you in jail unless you buy a hybrid

Is this a bad thing? Is saying "we'll give you $5000 off your taxes if you buy a hybrid car" worse than saying "we'll throw you in jail unless you buy a hybrid car"? That's the alternative. If gas consumption is too high, why not increase the gas tax and let individuals figure out the best way to deal with it? Maybe for some people the best solution is to reduce their commute rather than buy a new car.