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Morocco's Tax System Continues To Fall Short

by Lorys Charalambous, Tax-News.com, Cyprus

17 April 2013


Moroccan Budget Minister Driss El Azami El Idrissi has defended the Government's decision to reduce by MAD15bn (USD1.8bn) the country's 2013 investment budget, citing the deterioration in the public finances, notably a shortfall in fiscal revenues.

The Budget Minister explained that the country's 2012 budget deficit stood at 7.1% of gross domestic product (GDP), 2.1% higher than initially forecast for last year. Furthermore, tax revenues have shrunk by MAD3.3bn in the first quarter of this year, the minister noted.

Moroccan Finance Minister Nizar Baraka stressed that without the expenditure cuts, the budget deficit would now stand at 9% of GDP. Conceding that spending is currently greater than revenue collection, Baraka warned that Morocco is simply "living beyond its means."

The Government has been fiercely criticized for its "dangerous" decisions, lamentable fiscal policy, and lack of creativity to exit the crisis. There have been increasing calls for the Government to urgently reform taxation and to overhaul the country's compensation and retirement funds. Experts emphasize that the problems are clearly structural, citing the example of the 2013 Budget, where tax revenues cover just 60% of proposed Government spending.

The Moroccan Government aims to reduce the budget deficit to 5.5% of GDP in 2013.

TAGS: Morocco | Finance | tax | fiscal policy | gross domestic product (GDP) | retirement | budget | tax reform

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