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The IMF Predicts That Morocco Will Obtain a Potential Unmobilized Tax Revenue of 12% Of GDP

The IMF believes this will improve the country’s prospects for economic growth and social inclusion.

Good economic prospects for Morocco. The International Monetary Fund (IMF) expects the Kingdom to be able to mobilize the additional tax revenue that has not been mobilized. The banking institution ensures that the share of these revenues in the Moroccan economy, more precisely in the GDP, is still very low, but despite this, it should improve the economic prospects for growth and social inclusion. 

The entity estimates that within the Maghreb kingdom, the difference between actual and potential tax collection represents 12% of national GDP. Specifically, tax revenue represents 21.6% of GDP, while the IMF says the potential can reach 33.8%. The IMF, therefore, believes that the government has the opportunity to increase its revenues considerably. This could be done by bringing tax rates closer to the same levels as the country’s economic structures.

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For the IMF, Morocco has made significant progress in its economy. The North African country is experiencing a good broadening of the tax base. It is believed that reforms of the tax system, revision of personal income tax, value-added tax, and property taxes could boost revenue collection. Similarly, the IMF argues that reforms aimed at reducing informality and promoting economic diversification could help mobilize revenue and thus bring more benefits.ย 

All of these benefits could give a boost to Morocco’s hard hit by the coronavirus crisis and the recent Russian invasion of Ukraine. In addition, the IMF also predicts that modernizing and improving the efficiency of tax administrations would lead to stronger implementation and enforcement of laws, through measures to fight corruption, improve governance and increase transparency. This would strengthen the confidence of Moroccans in the tax system.

This is also reflected in some countries in the Middle East and in some countries in North Africa. Although many countries have been able to broaden their tax base by mobilizing additional tax revenue. In these countries, the difference between actual and potential tax collection represents around 14% of GDP. 

This issue focuses on recent global developments that are pushing governments to increase spending. Accordingly, MENA leaders must increase budgets to protect the poor, bring down food and fuel prices, modernize health and education systems, and build resilience to future events that threaten their lives. stability. 

Other regions of the world, such as Central Asia, lag behind in terms of tax revenue collection. Tax revenues represent 12.6% of GDP, but emerging countries show an average of 15.3%. The cases of countries in sub-Saharan Africa, Latin America, and the Caribbean stand out, with GDPs of 15.6 and 17.8 percent, respectively. According to the IMF, this low level of tax collection can be attributed to a number of reasons such as the use of direct taxes, especially those related to personal and corporate income. According to the IMF, these are very limited and property taxes are underdeveloped.

โ€œVarious indirect taxes on consumer goods account for the largest share of tax revenue (excluding oil and gas revenue), but exemptions are common and numerous. informal economy reduces governments’ ability to raise revenue,” said Jihad Azour, head of the organization’s Middle East and Central Asia department. Azour says that, according to a study, eliminating blanket exemptions and ineffective incentives would broaden the tax base. This would make tax systems fair and transparent, which would lead to a marked improvement in the situation.

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