Morocco’s Government Reverses Decision to Hike VAT Tax on Utility Bill

The government is moving away from its previous decision to hike the value-added tax on water and electricity under the new finance bill.

Rabat – The government is moving away from its previous decision to hike the value-added tax on water and electricity under the new finance bill.

The government has also decided to reduce the value-added tax (VAT) on urban transport. The news was announced following a Thursday meeting between the Minister of Economy and Finance Nadia Fettah, and the Minister Delegate in charge of the budget Fouzi Lekjaa, with the heads of majority parties in parliament.

Under the proposed budget draft, which is currently under discussion in parliament, the government included an increase in the VAT on water, sanitation services, and water meter rental from 7% to 8% for the next year.

For electricity, the tax would increase from 14% to 16%, and for electricity meter rental, it would rise from 7% to 11%. Taxes on passenger and freight transport operations were set to see an increase from 14% to 16%.

Head of the Independence Party, Nourredine Mediane, and Ahmed Altouzi, head of the Authenticity and Modernity Party in the House of Representatives, confirmed an agreement reached on Thursday not to increase the prices of water and electricity in the coming year.

In a statement to the press, the politicians said the meeting discussed the possibility of reducing the value-added tax for household water consumption from 7% to 0%. They also considered reducing the tax on urban transport to 10% instead of 14%.

The move comes following widespread backlash from netizens who denounced the government’s decision to hike utility bills and decried its impact on the national purchasing power.