Oxfam in Morocco publishes its new report “FAIR TAX MONITOR: Analysis of the Moroccan fiscal system”, which decrypts Moroccan taxation in depth and makes key proposals in the context of the health crisis which has plunged tax revenues and increased social spending .
For Oxfam, only an efficient, fair and efficient tax system will enable Morocco to put in place a development policy that effectively fights against inequalities.
The report reveals that tax revenue, which represents nearly 85% of state budget revenue on average between 2000 and 2018, weighs heavily and unfairly on a tiny category of society as is the case with the The income tax (IR) which creates a higher tax burden is unfairly imposed on employees.
Official statistics show a contribution of around 75% of employees to the total RI in Morocco. That is to say only 25% of contribution at the same time for professional income, land, agriculture and capital.
The pressure of the RI is supported mainly by the average incomes, nearly 3 quarters of the RI in Morocco are indeed paid by 47% of the employees while 56% of the wealth created by the economy is attributed to the remuneration of the capital against 30% for the remuneration of the work and this for the year 2018.
Morocco has experienced sustained growth in its tax revenues over the past 2 decades. However, the analysis of the elasticity of the Moroccan tax system during the same period shows that it is unable to keep pace with the evolution of the wealth created. The same observation was made recently by the Bank of Morocco in its last report on “the capacity to mobilize tax revenue in Morocco” (December 2020)
To ensure an economic recovery in the post-covid period, Morocco must absolutely put its tax system at the service of reducing inequalities and equip itself with the necessary means to finance more just, ambitious and redistributive public policies. Economic recovery must be established on the basis of a broader base and progressive taxation.
For Asmae Bouslamti, Governance Program Manager at Oxfam in Morocco “We have been advocating for a number of years for a deeper tax policy reform that will bring more social justice and corrections to inequalities. The economic and social recovery of the Kingdom should not be at the cost of reducing public revenues because this impacts the entire country. There are political choices to be made, especially in this context of the COVID-19 crisis, it is time to prioritize the generation of real value, cooperation and the future of the entire population ”.
Unfortunately, the long-awaited comprehensive and in-depth restructuring of fiscal policy in the 2021 finance law is once again postponed. While other countries have made radical choices to face the consequences of this pandemic, the government remains hesitant in the responses it brings to face the economic and social priorities of the country in this period of crisis: to preserve the fabric economy, protect jobs, finance essential public services and tackle the informal sector which supports 2/3 of households and which has been seriously affected.
Pour Asmae Bouslamti: “Widening the tax base to make the contribution of all economic players fairer is one of the great challenges for Morocco, in the current context. Taxation on wealth is one of these means that has been recommended since the 2013 Tax Conference and confirmed in 2019. There is no longer any question of pushing back again a measure that would give hope to poor populations and a turning point that would allow the Moroccan tax system to mobilize revenue and be more fair and progressive ”.
According to Oxfam estimates, if a wealth solidarity tax had been adopted at 5%, the income generated (based on 2019 data) could have been sufficient to almost double Morocco’s spending for its response to the coronavirus. .
The current budgetary challenges and the health crisis of 2020 show how necessary it is to adopt new fiscal measures capable of replenishing the state coffers. Likewise, the taxation of high incomes and large fortunes is among the actions necessary to limit the widening of inequalities and alleviate the pressure exerted on low and middle incomes. In addition, environmental taxation is an avenue that deserves to be exploited.
While Morocco has one of the lowest efficiency rates of public investment in the world and relies only on fiscal resources to fuel its budget, the role of taxation is absolutely decisive. Without a strong decision on the part of the government, there is a great risk that the country will turn towards austerity, and therefore a rise in social tension and inequalities.
Oxfam in Morocco wishes, through this new report on fiscal policy, to relaunch the debate between political, economic and social actors to start the real projects of change which must be at the heart of the reform of the development model and the political programs of the next elections. .
In this case, it is a question of actively acting to improve the progressivity of taxes, of urgently establishing a tax, exceptional or permanent, on great fortunes and environmental taxes, of making the tax system the lever of a efficient public spending geared towards social sectors, making VAT a tool in the fight against class and gender inequalities
It also involves studying the relevance of tax expenditures by reducing tax incentives that have not produced the expected economic effects or those contributing to the widening of social inequalities, improving the governance of the Moroccan tax system and the fight against corruption or even improve the participation of citizens and civil society in budget preparation.