Evaluating Value Added Tax in Morocco
(2011) NEK691 20111Department of Economics
- Abstract
- Following trade liberalisation and the resulting loss in government revenues from trade tariffs, governments need to find other sources of revenue to compensate for this loss. Many developing countries have set their hopes on value added tax (VAT). This was also the case for Morocco when it introduced VAT in 1986. Over the years it has become evident that the Moroccan VAT is not sufficiently simple, neutral and equitable as the number of exemptions and differentiated rates have multiplied and the informal sector is substantial. Therefore a VAT-reform was initiated in 2005 with the aim of progressively implementing a modern VAT, in line with the best international practices, by limiting the number of exemptions and moving towards a two-rate... (More)
- Following trade liberalisation and the resulting loss in government revenues from trade tariffs, governments need to find other sources of revenue to compensate for this loss. Many developing countries have set their hopes on value added tax (VAT). This was also the case for Morocco when it introduced VAT in 1986. Over the years it has become evident that the Moroccan VAT is not sufficiently simple, neutral and equitable as the number of exemptions and differentiated rates have multiplied and the informal sector is substantial. Therefore a VAT-reform was initiated in 2005 with the aim of progressively implementing a modern VAT, in line with the best international practices, by limiting the number of exemptions and moving towards a two-rate system. The aim of this study is to evaluate the Moroccan VAT-system, especially following the changes that have been implemented so far in the current reform. Issues of particular interest are the effects on government revenue and on equity indicators. The results of this study show that the government revenue from VAT as a proportion to GDP has increased. There has been a slight decrease in trade tariff revenues in absolute terms, which is by far outweighed by the increase in VAT-revenue. As regards equity indicators, there is a probable decrease in vertical equity following the abolition of some exemptions and reduced rates on basic products that generally benefit the poorer groups relatively more, while there are some indications that horizontal equity has been improved. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/1790271
- author
- Cruce, Fredrika LU
- supervisor
-
- Yves Bourdet LU
- Åsa Hansson LU
- organization
- course
- NEK691 20111
- year
- 2011
- type
- M2 - Bachelor Degree
- subject
- keywords
- Morocco, informal sector, VAT, fiscal reform, value added tax
- language
- English
- id
- 1790271
- date added to LUP
- 2011-02-25 15:05:56
- date last changed
- 2011-02-25 15:05:56
@misc{1790271, abstract = {{Following trade liberalisation and the resulting loss in government revenues from trade tariffs, governments need to find other sources of revenue to compensate for this loss. Many developing countries have set their hopes on value added tax (VAT). This was also the case for Morocco when it introduced VAT in 1986. Over the years it has become evident that the Moroccan VAT is not sufficiently simple, neutral and equitable as the number of exemptions and differentiated rates have multiplied and the informal sector is substantial. Therefore a VAT-reform was initiated in 2005 with the aim of progressively implementing a modern VAT, in line with the best international practices, by limiting the number of exemptions and moving towards a two-rate system. The aim of this study is to evaluate the Moroccan VAT-system, especially following the changes that have been implemented so far in the current reform. Issues of particular interest are the effects on government revenue and on equity indicators. The results of this study show that the government revenue from VAT as a proportion to GDP has increased. There has been a slight decrease in trade tariff revenues in absolute terms, which is by far outweighed by the increase in VAT-revenue. As regards equity indicators, there is a probable decrease in vertical equity following the abolition of some exemptions and reduced rates on basic products that generally benefit the poorer groups relatively more, while there are some indications that horizontal equity has been improved.}}, author = {{Cruce, Fredrika}}, language = {{eng}}, note = {{Student Paper}}, title = {{Evaluating Value Added Tax in Morocco}}, year = {{2011}}, }