Evaluation of Fiscal Effort in Developing Countries : The Case of Morocco

Abstract

In recent years, Moroccan economic growth has accelerated relatively, but tax revenues have remained relatively stable (averaging 20% of GDP). The underutilization of revenues compared to this increasing trend stems from both the structure of the economy and the fiscal policy of the country. The predominance of the agricultural sector and the weight of the informal sector in the economy are factors that do not encourage the mobilization of tax revenues in Morocco. Several institutional and structural factors contribute to an increasing underutilization of tax sources in Morocco. These factors include: (i) the complexity of tax codes; (ii) the intensive use of tax expenditures, reducing the tax base; and (iii) insufficient integration of the informal economy into the tax system. This study aims to assess the fiscal effort in Morocco to evaluate to what extent it is compatible with the country's tax capacity and to explore ways to increase these public resources.