Sociological Behaviour and Excise Duty Compliance Nexus: Do Dispute Resolution Mechanisms Matter? Evidence From Alcoholic Beverage Manufacturers in Kenya

Abstract

Purpose: Despite implementation of several initiatives to improve tax revenue collections, actual tax revenues have fallen short of projected targets. The purpose of the study was to determine the moderating role of dispute resolution mechanisms on the relationship between sociological behaviour and excise duty compliance among alcoholic beverage manufacturers in Nairobi County, Kenya. The study was guided by the theory of planned behaviour and judicial organization and adjective law theory. Methodology: The study employed explanatory research design. The target population of the study was 231 respondents. Primary data was collected through structured questionnaires. Out of 231 issued questionnaires, 185 filled and returned the questionnaires. Results: The study found that sociological behavior had a positive and significant effect on excise duty compliance, β=0.270 and p-value=0.000124<0.05. The study also found that dispute resolution mechanisms moderate and enhance the positive effect of sociological behaviour on excise duty compliance, β=0.113 and p-value of 0.000000<0.05. Conclusion: It is recommended that policymakers should consider and incorporate the theory of planned behaviour into tax compliance frameworks since understanding how sociological behaviour influences tax compliance can inform the development of targeted interventions and policies. It is also recommended that effective and affordable dispute resolution mechanisms should be put in place as they provide clarity and ultimately result in resolution of conflicts arising on account of excise duty thus promoting excise duty compliance. Future studies should be conducted on the effect of tax incentives on excise duty compliance.