Practical Proof of Laffer Curve. on the Example of Increasing Excise on Cigarettes in Bulgaria

The paper deals with proofing Laffer Curve. Until now it has never been proved, because lack of real statistical data as a tool for practical proof. The paper shows that from the increase of the excise on cigarettes 7 times (700%) from 22,80 leva per 1000 pieces to 155 leva per 1000 pieces, it can be constructed Laffer Curve - revenues from excise on cigarettes starts to grow, but after a turning point in 2009 every increase in the excise on the cigarettes produced less revenues (measured as a percentage of GDP). At the end of the paper author makes a simulation and proves that the Laffer curve on cigarettes is one way street i.e. every reduction back of the excise can not produce more revenues