UK Budget a Month Away as Treasury Faces Laffer Curve Tax Revenue Risk As the UK Budget approaches on October 28, the Treasury may be beyond the Laffer Curve peak, where higher taxes bring less revenue. Tax rises could backfire as borrowing runs above target. The UK Budget is a month away, and the Treasury is, by all accounts, desperate. Borrowing is running above target, and the mix of higher gilt yields and higher inflation makes further borrowing unrealistic. The new Chancellor does not understand what is happening, and the Prime Minister is not interested. Maybe John Healey and Andy Burnham can trim spending, as they jolly well ought to, but even so, there will have to be tax rises.We have heard the stuff about getting more from the relatively wealthy. It is wrapped up in slimy language about asking those with the broadest backs to contribute a bit more. But there is a big problem: we may be at or beyond the point on the Laffer Curve where increasing tax rates brings in less revenue, not more.The Laffer Curve story goes back to a graph drawn by economist Art Laffer on a napkin at a dinner in 1974. It showed that sometimes by cutting tax rates you raise revenue. On one side of the graph the tax rate is zero, which brings in no money. On the other side it is 100 per cent, which also brings in no money, because people or businesses will not do the activity that is being taxed so highly. Somewhere in between there is a peak, and if you want to maximise revenue and activity you have to be on the right side of it.Laffer has recently been causing a stir by criticising this government. He said it was taxing itself to death and he could not believe it was considering a wealth tax. When Laffer says the UK is taxing itself to death we should pay attention.I had lunch with him some years ago and he made his point by telling a story about Robin Hood. In the fable, Robin Hood robbed the rich to help the poor and became a folk hero. But what, asked Laffer, did the rich do to avoid being robbed? They did not travel through Sherwood Forest at all, or they hired a troop of bodyguards to defend them. That, he said, is what they do now. Companies set up in jurisdictions with much lower corporation tax than in the UK. People move offshore.Sir Jim Ratcliffe, the founder of the chemical giant Ineos, went to Monaco in 2020. Chris Rokos, the hedge-fund billionaire and the UK's third-largest payer of income tax, has just gone to Greece. As for the bodyguards, Laffer explained they are the expensive lawyers and accountants that defend wealthy people against Revenue & Customs.So where are we on the Laffer Curve? Claritas Tax, an advisory firm, put out a note on Friday arguing that we are at the top of the Laffer Curve and that tax receipts will start to slide. Start with the top rate of income tax, 45 per cent. We are clearly over the top. Back in the 2020-21 tax year our top 1 per cent of earners accounted for 30.7 per cent of all income tax revenue. Since then that proportion has started to decline and fell to 26.6 per cent in 2025-26.Corporation tax? Not clear, but revenue growth is slowing after the sharp rise in the main rate from 19 to 25 per cent in 2023. Stamp duty on shares? The rates have not changed but our habits have. Revenue peaked at £4.8 billion in 2000 and is now £4.32 billion, which is a huge drop in real terms.Revenue on stamp duty on property moves has gone on climbing, but at a cost in cutting the number of transactions. In 2006 annual home sales reached 1.67 million. Last year, despite the increase in population, it was 1.2 million and this year is running lower still. Since we spend money on kitting out new homes when we move, lower transactions cut tax revenue in other ways, too.Finally, what of national insurance? That last increase, by Rachel Reeves, did bring in an extra £25 billion a year. But it has already pushed up prices and cost upwards of 100,000 jobs, and I fear more job losses are on the way.On October 28, Andy Burnham's government will set out its Budget. We do not know what they will do, but we do know about tax raids already on the way. The best thing you can do is get prepared. Simon Lambert, publisher of This Is Money, has called on some of Britain's leading financial experts to create a new six-week plan. It cuts through the noise and takes you step-by-step through everything you need to do to protect your money. Do not wait. Click here and sign up to Protect Your Money now.So what will Healey and Burnham do come October 28? I do not know. But I suggest Healey invites Laffer in for lunch.