The Tax Burden and Economic Growth in Morocco: Empirical Analysis

Abstract

The tax burden in Morocco has an important place, both in the political arena and in the media. These debates are often based on the identification of the tax burden in the economy. Moreover, taxation plays a key role in achieving the objectives of the State’s social and economic policy. Because its main role is to collect resources to supply the state budget to meet multiple obligations, taxes have an economic role (correcting market inefficiencies in resource allocation) and a social role (reducing inequalities through income redistribution, social equity...). The paper uses to identify the Laffer growth curve and determine the optimal tax rate maximizing economic growth for the Moroccan economy we used econometric techniques. This empirical study covered the period from 1990 to 2018. However, a high tax rate can influence the macroeconomic performance of the state as in the case of Morocco, since Morocco ranks among the developing countries with a high tax burden, the latter defines the relative importance of taxes and duties (or compulsory levies, such as social insurance contributions on wages) in the national economy based on the tax rate which is considered the most relevant economic indicator. The challenge is to find an optimal tax rate that stimulates economic growth while at the same time achieving fairness and equity in our tax system.