By Neaman LerhmariRabat - Taxpayers are the bread and the butter of the government. In a developing economy like Morocco, they provide the resources to run the social programs and to ensure the smooth working of administrations and government facilities. However, a large, growing category of lucky taxpayers are being absolved of paying, leaving the less fortunate compensate for the shortfall.
By Neaman Lerhmari
Rabat – Taxpayers are the bread and the butter of the government. In a developing economy like Morocco, they provide the resources to run the social programs and to ensure the smooth working of administrations and government facilities. However, a large, growing category of lucky taxpayers are being absolved of paying, leaving the less fortunate compensate for the shortfall.
“Who bears the tax burden the most in Morocco?” wonders the Moroccan daily Assabah, who provided eye-opening figures and facts on its December 1 edition about the taxation policy in the Kingdom.
The Moroccan tax regime relies on two segments: indirect taxes (domestic and external value added taxes, customs…) and direct taxes. Private and public sector employees alone provide 75 percent of the tac revenue, with an uneven contribution: private sector employees generated a total of MAD 22.4 billion, while the public sector employees paid MAD 6.7 billion. Doctors, lawyers, accountants and other liberal professions paid only MAD 3.6 billion.
Similar gaps are brought to light when it comes to companies, since the Tax Directorate indicated that 35 companies pay up to a third of corporate tax incomes.
Misguided tax exonerations
The Tax Directorate granted MAD 33.4 billion in tax exemption in 2017, revealed The Court of Auditors in a report on the Ministry of Finance. The grant benefits to companies from various sectors, outside of any legal framework. In fact, the line ministry has not set a clear definition of the exemption policy, and there is no mention of the criteria necessary to benefit from the exemption.
The Court of Auditors expressed their concerns about the tax exemptions, which are raising year after year, as the Ministry of Finance hasn’t set any plans to review the said waivers nor to assess their efficiency.
Articles 39 and 40 of the Moroccan Constitution stipulates that everyone, depending on their abilities, has to provide for the public expenses that can only be fixed and distributed by the law. The exemptions are not necessarily against the law, since they can play an instrumental role in reviving and stimulating the economy. However, the Tax Directorate hasn’t set any policy to manage the waivers or the policies they are supposed to fulfill.
According to the Assabah, not only the tax exemptions are not based on an economic rationale, but they benefit just a lucky few. The International Monetary Fund did not fail to criticize Morocco’s growing tax exemptions, stating that “they usually benefit to highly paid individuals”. Forty percent of the exemptions, according to the IMF, benefit to high-income groups, while only 10 percent go to disadvantaged social groups.