Rabat – As price inflation continues to break records around the world, Morocco’s government recently announced a tax reform that would primarily benefit the country’s middle class and support national purchasing power.
The government is in the process of revising the current tax code to mitigate the effect of rising prices on the country’s working class and middle-class retired population, Morocco’s Deputy Minister for State Budget, Fouzi Lakjaa, said during a presentation at the country’s House of Representatives on July 20.
The reform to the income-tax (IR) could be made possible through three primary means, Lakjaa explained.
Morocco’s labor force currently accounts for 73% of IR collected by the country’s treasury.
Among the measures the government could possibly enact, Lakjaa proposed raising the minimum threshold for tax exemption above the current level of MAD 30,000 ($3,000) annually.
In addition, Lakjaa said that the government could consider lowering the IR rate on certain categories of the population among other possible measures.
The tax cut is unlikely to bring any significant improvement to the country’s working class as they are already exempted from paying IR under the current tax code. Almost 60% of Morocco’s working population falls below the annual minimum IR threshold of $3,000, according to official data.
Of Morocco’s retired population, 86% are unlikely to benefit from the tax reform as they are already exempt from the income tax.
The tax reform is therefore set to benefit 2.7% of Morocco’s retired population who currently make up more than 77% of the IR the government collects from the retired labor force.
With only 40% of its labor force earning more than $3,000 annually, Morocco is a lower-middle-class country, according to World Bank data.
In 2007, Morocco’s Higher Commission for Planning (HCP), the country’s official center for statistical research, defined the middle class as the labor force earning an annual average ranging from $4104 (or $11 a day) to $9816 (or $27 a day). The definition led HCP to conclude that 53% of Morocco’s population belongs to the middle-class.
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