Morocco’s Local Authorities Face 16% Revenue Decline Amid Tax Shortfalls

According to the latest issue of the Monthly Bulletin of Local Finance Statistics, the ordinary revenue of local authorities recorded a 15.9% drop at the end of November 2020 compared to the same period in 2019.

This drop, explains the General Treasury of the Kingdom (TGR), is due to a 12.8% decrease in direct taxes. The direct tax item was strongly influenced by a weak inflow of corporate tax (IS) and income tax (IR) of around (-19%) at the regional level. A weak mobilization of professional taxes and municipal services as well as that on unbuilt land will have acted on the coffers of the local authorities.

As for the mobilization of indirect taxes, it was impacted among others, by a weak inflow of value added tax (VAT) (-10.9%), insurance contract tax (-40%), tourist tax (-55.2%), tax on construction contracts (-18.2%) and tax on drinking establishments (-48.1%). In the same vein, the publication notes that the deficit in the resources of local authorities is also explained by a 28.8% decrease in non-tax revenue, in particular a 63.7% decrease in subsidies, a 20.6% decrease in subsidies, a 31.2% decrease in domain revenue and a 15.5% decrease in the fee for temporary occupation of the municipal public domain.

At the end of November 2020 where the annexed accounts and budgets were in surplus with a balance of 769 MDH, the TGR speaks of an overall surplus of 3.1 BMDH against an overall surplus of 6 BMDH recorded a year earlier, given a positive balance of 136 MDH, notes the same source.

This surplus of 3.1 BMDH, it is specified, is intended to cover the expenses incurred and to be paid during the month of December 2020, and if necessary, the expenses whose payment will take place the following year. For comparison, it should be noted that at the end of November 2020, the ordinary revenue of local authorities recorded a 15.9% drop compared to the same period in 2019.

Clearly, the downward trend in resources has led to a decrease in current expenditure and investment expenditure at the level of local authorities.