Abstract
The rapid increase in government expenditure in European member states has raised concerns among policymakers regarding the role of tax revenue generation and its impact on economic growth. The study aims to determine how excise duty revenue influences economic growth in Southeastern Europe (SEE), considering the dual roles of excise taxes in revenue collection and as regulatory tools. It examines how different excise duty policies relate to economic performance and regional integration. Although existing literature addresses fiscal and regulatory issues of excise duties, less attention has been given to their broader macroeconomic implications, such as effects on economic growth and market cohesion within the diverse policy environment of SEE. The study analyzed the impact of excise taxes on economic growth in Romania, Bulgaria, Greece, and Serbia, using panel data from 2006 to 2023 and employing panel least squares estimation. Results indicate that excise tax revenue, gross capital formation, and trade openness positively influence economic growth, while inflation has a negative effect. The study proposes optimal excise tax rates and structures aligned with broader economic objectives. These should avoid depressing consumption or deterring investment in sectors that promote innovation and human capital development. Carefully calibrated tax rates, policies, and revenue administration efforts can facilitate growth without undermining key industries.