Because you should tax the thing you want to stop. Burning carbon is absolutely fine, provided the carbon originally came from the atmosphere and not buried deposits. It's the open-loop cycle that's the problem. The moment you dig it up, eventually it's bound for atmosphere. You want to financially encourage the development of "green" petroleum - nobody will bother if it's taxed all the same.

Also, if you try and individually tax the hundreds of thousands of different uses for carbon, according to how much carbon each thing uses, inevitably you'll get it wrong, and this will create inefficiencies and perverse incentives to do arbitrage between the various poorly calibrated taxes. What you want is for the market to figure it all out!

Supply chains are not 100% transparent.

We know how bad one unit of "cigarette" is for our health, but we don't know how bad one unit of xxx is for the environment. An apple can have a co2 footprint of multiple tons of co2 or zero tons of co2. We can't know for sure.

Products don’t come with a label measuring how much oil was burned in their production. Even if the manufacturer wanted to know, tracing that detail through their entire supply chain is really difficult. Preventing fraud is also very challenging.

Whereas if you tax at extraction this is automatically take into account at every step of the supply chain. The market does all the hard work for you.

Taxing carbon at the point of consumption is like taxing a product if the manufacturers' employees have smoked at the point of consumption. How are you going to enforce that? A product that was manufactured by smokers and non smokers looks identical.