Oxfam Morocco to Analyze Tax Incentives in Key Economic Sectors

Oxfam Morocco’s objective in launching this study soon is to "contribute in a constructive way to nourishing the national debate on the good governance of public finances," says the NGO, which intends to "evaluate the results and objectives" that justify the tax incentives of these three sectors, the revenue shortfall of which for the State budget is significant.

Oxfam Morocco’s study is part of a comprehensive overhaul of the national tax system to make it fairer and more equitable. "The revision of all tax expenditures, based on a cost-benefit analysis, is a first step that Morocco must consider when preparing the 2022 finance law," recommends the NGO, which adds that this revision must take into account the added value and the incentive value in the economy of these tax expenditures, without forgetting their impact on investment.

According to the figures in the report on tax expenditures tabled in parliament with the 2021 finance bill, 81% (246/302) of the derogatory measures of 2020 are "qualified as tax expenditures". By evaluating these data, Oxfam realized that the total amount of tax expenditures corresponding to these measures is around 29.91 billion dirhams. "This large revenue shortfall exceeds the total amount of all the expenses actually incurred during the same year through the Covid-19 special allocation account (29.32 billion dirhams)," notes the NGO, which also points out that the "financing of these initiatives remains a major challenge", despite the efforts of the State to reduce the socio-economic effects of Covid-19.

"Being a state whose ordinary budget revenues depend largely on tax revenues (LF2021: 88.37%) without even being able to cover operating expenses and debt service (ordinary balance deficit /LF2021: −25.83 billion dirhams), the efficiency and effectiveness in public finance management has become a sine qua non condition for the success of the three priorities that Morocco has set for the post-Covid-19 period," Oxfam also notes, recalling that when the 2021 finance law was drawn up and adopted, three priorities were defined on the basis of the royal guidelines, namely: economic recovery, the generalization of social protection and the reform of the public sector.