sub My_Regex
{
    my($raw_text, $tag) = @_;
    
    $raw_text =~ /<$tag>{1}(?s:.)(<\/$tag>){1}/;
    my $output = $1;
    print "OUTPUT: $output\n";
}
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 $raw_text =~ /<$tag>{1}(.*)(<\/$tag>){1}/s;

Try this, the 's' at the end modifies '.' to also match line endings and is guaranteed to work with 5.8.

By the way, your pattern only works if this tag only occurs once in your string. Otherwise using (.*?) instead of (.*) will at least allow you to find the first occurence. The difference is that .* tries to find the longest possible string while .*? will get the shortest.

Please follow my instructions. I said to replace the dot with (?s:.), I did not say to replace (.*) with (?s:.).