THE EFFECTS OF EUROPEAN UNION EXCISE DUTY HARMONIZATION ON TAX POLICY AND INTERNATIONAL TRADE: THE CASE OF LITHUANIA

Santrauka

This article examines the effects of European Union excise duty harmonization on tax policy and international trade in Lithuania. Excise duties are an important fiscal instrument used to generate government revenue and influence consumer behaviour, particularly regarding products such as alcohol, tobacco, and energy. The research aims to analyse how EU harmonization of excise duties affects Lithuania’s national tax policy and trade dynamics within the Single Market. The study applies several research methods, including analysis and synthesis of scientific literature, examination of EU legislation on excise duties, and interpretation of statistical data from Eurostat, the European Commission, and OECD sources. The findings indicate that EU harmonization provides a common legal and administrative framework that improves transparency, facilitates cross-border trade, and supports consistent taxation among member states. At the same time, national fiscal sovereignty allows Lithuania to set higher excise rates to pursue public health and fiscal objectives. Empirical analysis shows that higher excise duties, such as the 2017 alcohol tax increase, contributed to increased tax revenue and reduced legal alcohol consumption. However, differences in excise rates between neighbouring countries continue to encourage cross-border shopping and illicit trade, creating challenges for domestic revenue collection. The study concludes that although EU harmonization strengthens market coordination and regulatory stability, Lithuania must continuously balance public health goals, fiscal policy, and international trade dynamics.