The Concept of the Laffer Curve in Shaping Fiscal Policy in Selected Countries of Central and Eastern Europe

Objective The objective of the paper is to analyse contemporary trends in fiscal policy of the European Union and to interpret them in light of the Laffer curve theory, with particular reference to selected post-transition economies of Central and Eastern Europe (Poland, the Czech Republic, Slovakia, Estonia and Latvia). The study seeks to identify the extent to which the logic of the Laffer curve is reflected in the design and outcomes of national tax systems. Methodology The paper is based on a critical review of the economic literature and a comparative analysis of tax policies in selected EU Member States. A qualitative approach has been adopted, combining theoretical reflection on the Laffer curve with a descriptive examination of tax-rate structures, fiscal reforms and budgetary outcomes. The analysis draws on both seminal and contemporary works on supply-side economics, the taxation of labour and capital and the evolution of fiscal governance in the European Union. Findings The study shows that, although the Laffer curve provides an intuitive framework for explaining the relationship between tax rates and budgetary revenues, its practical application in EU fiscal policy is limited. Post-transition economies of Central and Eastern Europe – most notably Estonia, Slovakia, and Latvia – have implemented reforms inspired by supply-side reasoning, yet the observed effects on revenues and growth have been heterogeneous and strongly conditioned by institutional quality, tax administration efficiency and the scale of the informal economy. In the case of Poland, the examples of VAT and CIT illustrate that the effectiveness of the tax system is determined not solely by statutory rates but also by the capacity of the fiscal apparatus to enforce compliance. Value Added The paper contributes to the ongoing debate on the usefulness of the Laffer curve as an analytical instrument by situating it in the specific context of post-transition EU economies. It highlights the tension between the simplifying assumptions of the model and the institutional, political, and social complexity of real fiscal systems, thereby offering a more nuanced interpretation of the relationship between tax rates and public revenues. From the perspective of intercultural management, the study demonstrates that the effectiveness of fiscal reforms inspired by the Laffer curve is strongly mediated by culturally embedded factors such as tax morale, the level of generalised trust, attitudes towards the state, and the prevailing organisational culture of public administration. These factors differ substantially across the analysed countries of Central and Eastern Europe, which helps to explain why identical fiscal instruments produce divergent outcomes in different national and cultural contexts. Recommendations Fiscal authorities in Central and Eastern Europe should treat the Laffer curve as a heuristic rather than an operational rule for setting tax rates. Decisions on the structure and level of taxation should take into account the quality of tax administration, the level of public trust, the structure of the economy and broader social objectives such as redistribution and social security. Further empirical research, including country-specific econometric studies, is recommended in order to better identify the location of particular tax systems along the Laffer curve.