Effect of Alcoholic Tax on Financial Performance of Selected Brewery Firms in Nigeria (2012-2022)

Abstract

This research delved into the impact of alcoholic taxes on the financial performance of selected brewery firms in Nigeria within the time frame of 2012 to 2022. Specifically, the study examined the influence of alcohol excise tax, alcohol price, alcohol value-added tax, and alcohol consumption on the financial performance of these brewery firms. Employing an ex post facto research design, the study utilized the general method of moments (GMM) panel least squares regression for data analysis. The findings revealed that alcohol excise tax exerted a significant negative effect on the financial performance of the brewery firms. Conversely, the alcohol price variable exhibited a significant positive impact on their financial performance. Additionally, alcohol value-added tax was found to have a negative and significant effect on the financial performance of the brewery firms. Furthermore, the study determined that alcohol consumption tax had a positive and significant effect on the financial performance of the brewery firms. Based on these results, the study recommends that brewery firms should consider pricing as a crucial element in their production function to boost revenue and profit, thereby enhancing financial performance. Furthermore, adopting a production model where consumption volume is a significant variable is advised, as it contributes positively to financial performance. Additionally, the firms are encouraged to implement strategies to recover value-added tax payments, leveraging external economies of scale and ultimately improving their financial performance.