IMF Urges Morocco to Boost Tax Revenue, Citing Untapped Potential

The kingdom must review its tax policy to improve its economic growth, the UN institution said. In a study on the capacity to mobilize tax revenues in Morocco, it noted that the country can mobilize additional tax revenues. The results show that the level of tax revenues is relatively low compared to the tax capacity it has. Morocco has enough leeway to collect additional tax revenues, it estimated.

According to the figures, the difference between the actual and potential perception of taxes represents about 12% of GDP (excluding oil and gas). The tax revenue/GDP ratio reaches 21.6% while the potential is 33.8% of GDP, the IMF said, noting that the observation is the same throughout the Middle East and North Africa (MENA) region. The average fiscal effort in Morocco is estimated at 0.6.

However, the experts said, the kingdom has made significant progress in terms of broadening the tax base or is in the process of doing so. However, tax system reforms must be carried out in order to hope for inclusive growth.

In this context, the IMF has made several recommendations, including the overhaul of personal income tax and value added tax, as well as the development of property taxes, which could boost recovery, make systems more progressive and promote inclusion. Similarly, reforms aimed at reducing informality and promoting economic diversification could support revenue mobilization.