IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Is Tax Policy Retarding Growth in Morocco?

  • Tatom, John

Morocco has a distinguished reputation for opening the economy, privatization and for increasing the role of the private sector in economic development. The nation has also had well known success in achieving a high degree of price stability through a fixed and credible exchange rate that was supported by sound monetary policy. All of these successes led to accelerated investment, both domestically and by foreigners. One highly important potential impediment to growth is that Morocco, however, appears to have neglected the global fiscal reform movement aimed at providing a growth oriented and fairer tax system that encourages private sector risk-taking and investment. Following some key reform in the early 1990s, tax rates have not been altered much since then and remain relatively high, especially for individuals at low and moderate income levels, in comparison with other countries. This paper examines the importance of tax policy for investment and whether there are opportunities there to accelerate productivity and growth through tax reform. Morocco has extremely high taxes, especially the individual income tax, social insurance or payroll taxes and the value added tax. The individual income tax is the highest in the region and the highest marginal rate begins at a relatively low level of income. The corporate tax rate is among the highest in the region as well. At least one country in the region, Tunisia, has already taken the initiative to follow the global trend of cutting marginal tax rates in order to stimulate investment and growth. Morocco could usefully consider taking the lead in pursuing more competitive and lower, broader and less-discriminating taxation. Among the most critical steps would be cutting the top rate on individual income from 44 percent and extending the income level from where it begins to a larger multiple of median income. There are numerous loopholes that could be closed in order to finance such a change. Such steps would have the added benefits of lowering interest rates and boosting private capital formation and economic growth. But a broader and more aggressive agenda of tax reform is easily justified by regional or international comparisons.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://mpra.ub.uni-muenchen.de/6011/1/MPRA_paper_6011.pdf
File Function: original version
Download Restriction: no

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6011.

as
in new window

Length:
Date of creation: 29 Nov 2007
Date of revision:
Handle: RePEc:pra:mprapa:6011
Contact details of provider: Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Edward C. Prescott, 2004. "Why do Americans work so much more than Europeans?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Jul, pages 2-13.
  2. Kalemli-Özcan, Sebnem & Chanda, Areendam & Alfaro, Laura & Sayek, Selin, 2007. "How Does Foreign Direct Investment Promote Economic Growth? Exploring The Effects Of Financial Markets On Linkages," Proceedings of the German Development Economics Conference, Göttingen 2007 28, Verein für Socialpolitik, Research Committee Development Economics.
  3. S M Ali Abbas & Jakob E Christensen, 2010. "The Role of Domestic Debt Markets in Economic Growth: An Empirical Investigation for Low-Income Countries and Emerging Markets," IMF Staff Papers, Palgrave Macmillan, vol. 57(1), pages 209-255, April.
  4. Jawwad Noor, 2007. "Hyperbolic Discounting and the Standard Model," Boston University - Department of Economics - Working Papers Series WP2007-028, Boston University - Department of Economics.
  5. Thomas J. Kniesner & James P. Ziliak, 1998. "The Effects of Recent Tax Reforms on Labor Supply," Books, American Enterprise Institute, number 51092, 6.
  6. Simon Gilchrist & Egon Zakrajsek, 2007. "Investment and the Cost of Capital: New Evidence from the Corporate Bond Market," NBER Working Papers 13174, National Bureau of Economic Research, Inc.
  7. Thomas MaCurdy & David Green & Harry Paarsch, 1990. "Assessing Empirical Approaches for Analyzing Taxes and Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 25(3), pages 415-490.
  8. Richard Rogerson, 2007. "Structural Transformation and the Deterioration of European Labor Market Outcomes," NBER Working Papers 12889, National Bureau of Economic Research, Inc.
  9. Juan Sole & Gabriel Sensenbrenner & Amor Tahari & J. E. J. De Vrijer & Marina Moretti & Patricia D Brenner & A. Senhadji Semlali, 2007. "Financial Sector Reforms and Prospects for Financial Integration in Maghreb Countries," IMF Working Papers 07/125, International Monetary Fund.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:6011. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.