Economic drivers of tax revenue: insights from European economies

Milica Ristić Cakić, Branimir Kalaš, Jadranka Đurović Todorović and Marina Đorđević

Post-Communist Economies, 2025, vol. 37, issue 5, 499-515

Abstract: Tax revenues are one of the most essential drivers of economic growth and development. Determining the main factors that contribute to higher or lower tax revenues is a relevant issue in public finance. The objective of the research is to find how macroeconomic determinants influence the tax revenues and provide fresh theoretical and empirical approach of tax revenues mobilisation. The study examines the influence of macroeconomic determinants on tax revenues in European countries for the period 2006–2023. Applying different panel models, the empirical findings revealed that GDPpc, industry value added and trade openness positively influence the tax revenues, while inflation, unemployment and government debt have negative effects. The study suggests that policymakers in these countries must focus on creating a favourable economic environment that will be reflected in greater rates of economic growth and development, stable price level, an acceptable unemployment rate, a higher share of industry value added and trade openness in GDP, as well as sustainable government debt level.

Date: 2025
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DOI: 10.1080/14631377.2025.2461929

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