Contribution of the alcohol industry to the tax revenue of Uganda: a case study of Nile Breweries UG (LTD)

Abstract

This study is set up to examine the contribution of the alcohol industry to the tax revenue of Uganda, a case study of Nile Breweries, Uganda Limited. Tax revenue is conceived as a dependent variable in this study while the different aspects of the alcohol industry are the independent variables. The quantitative study adopted a descriptive research design which was relied on to conduct the whole study. Data was collected from a sample of 50 respondents who doubled as employees of NBL. Data was analyzed using SPSS and both correlation and multivariate regression analysis were used in establishing the relationship between variables. The study revealed that the alcohol industry contributes a lot to the tax base of the country (38.7%) and that tax revenue increases with increase in alcohol sales (76.0%). It was confirmed that that alcohol industry is an important sector for tax revenue growth of Uganda (77.3%). The study confirmed that there is a positive correlation between alcohol production and Tax revenue (r = 0.657) and, a positive relationship between Employment and Tax revenue (r = 0.905*). Gross fixed domestic investment also gave a positive correlation with Tax revenue (r = 0.957) at 0.01 level of significance (p=0.00<0.01). It was also confirmed that the alcohol industry provided several employment opportunities for both skilled and unskilled labor who in turn contribute to the national economy by paying income taxes. It was also established that increased production of alcoholic drinks such as wines, beers and spirits increases chances of obtaining higher tax revenue in a particular financial year. Furthermore, increased gross domestic investment in alcohol could render a big contribution on the country’s tax revenue and GDP in the long run. Generally the high taxes levied on alcohol in a bid to discourage people such as youth from over consumption end up contributing a lot of tax revenue to the government. The study has provided evidence for the contribution of the alcohol industry on the tax revenue of Uganda. It was recommended that the government of Uganda ought to implement favorable domestic investment policies to boost alcohol production and also offer tax incentives holidays to companies producing large quantities of alcoholic drinks to boost their processes and consequently give the, morale to pay their taxes on time.