The Impact of Tax Burden and Tax Structure on the Economic Growth of the Balkan Region
Purpose: The present study is aimed at the analysis of the extent to which the collected taxes and the structure thereof have an impact on the economic growth of the Balkan region. Design/Methodology/Approach: Linear regression models have been developed and applied. Data for the period 2005-2018 have been used from the annual reports on the execution of the consolidated budget, published by the Ministries of finance of the Balkan countries and macroeconomic data from their Central banks and National statistical institutions. The estimation is made using the ordinary least squares (OLS) method. Findings: The results of the applied models show that the increase of the tax burden during the period under review and the restructuring of the tax systems have a restraining effect in the search for higher economic growth. The countries in the Balkan region where the tax burden is lower, as well as the countries where indirect taxes occupy a larger relative share, show better economic results. Practical Implications: The present study provides a good starting point for the conduct of fiscal policy by the ruling governments in the countries of the Balkan region. The guidelines are on how these governments manage the tax burden on the economic agents and what the appropriate structure of applicable taxes would be to achieve sustainable economic development. Originality/Value: The study contributes to the scientific literature by conducting an extensive analysis of some of the already studied relationships between taxation and economic growth, on the one hand, and examines the extent to which opinions already expressed are applicable to Balkan countries’ policy, on the other hand. The study also identifies the reason for some of the dynamic processes in the Balkan economies in the period 2005-2018.