Morocco aims for 'fiscal justice' through tax reform

Income tax is disproportionately collected with 73% of revenue coming from taxing wages, Finance Ministry data showed.
Saturday 11/05/2019
Moroccan King Mohammed VI. (AFP)
Moroccan King Mohammed VI. (AFP)

RABAT - The Moroccan government is mulling new measures to enlarge the tax base to alleviate fiscal pressure on the middle class and increase funding for social services, Moroccan Finance Minister Mohamed Benchaaboun said.

The measures aim at making the rich pay their "fair share" of taxes as well as fighting tax evasion and fraud, Benchaaboun said May 3 at the end of a national conference on taxation.

Income tax is disproportionately collected with 73% of revenue coming from taxing wages, Finance Ministry data showed.

"The average contribution of a wage-earner is five times higher than that of a self-employed," Benchaaboun said. "This situation runs against the principle of fiscal justice, which should be amended by implementing the principle of equal income, equal taxes."

Morocco collected $15.5 billion in net tax revenue in 2018, up 4.6% compared with 2017, the General Tax Administration said.

Morocco's fiscal system suffers from a high concentration -- 50% of the income tax, company tax and value added tax (VAT) combined is paid by just 140 companies, official figures indicate and 1% of companies account for 80% of corporate tax revenue.

Morocco loses up to $2.45 billion due to tax evasion and fraud by multinationals, Oxfam said in a report.

The Moroccan tax conference's recommendations, which offer guiding principles for future budget laws, included establishing VAT neutrality, tax progressivity as well as grouping local and parafiscal taxes in a single code.

Morocco, the most unequal country in North Africa in terms of wealth, should impose a wealth tax to bridge the gap between the rich and the poor, Oxfam expert Asmae Bouslamti said.

(Reuters)