In the 1970s, the American economist Arthur Laffer described how higher taxes can end up creating the opposite outcome to that intended – instead of increasing government tax revenue, it ends up reducing tax revenue, because higher taxes reduce the incentive to work, spend and invest. This apparent paradox is exactly where the Labour tax policy is when it comes to the UK’s energy sector. There are also striking parallels with Laffer’s theory when it comes to carbon emissions- that this policy, which also aims to reduce the UK’s carbon emissions, will end up increasing them. The UK’s oil and gas industry should – and has – been paying significantly more tax during the period of higher commodity prices after Russia’s invasion of Ukraine. It has paid £15 billion in tax over the last two years alone- a quarter of the annual education budget. However, policy proposals from the Labour Party, which would raise tax take per barrel by another 40%, would destroy the economics of investment in the UK’s own energy resources, especially with energy prices now back to where they were before the 2022 energy crisis. Our analysis indicates that these even higher taxes will not generate increased...