Morocco continues to reform its economic system to create a better country for Moroccans. The national government, through the Finance Commission, has just made public in front of the Chamber of Councillors a new plan that promises to be beneficial to all citizens of the Kingdom. The Minister Delegate for the Budget, Fouzi Lekjaa, announced that the Alawi country will undergo an income tax reform (ISR).
This is a new measure aimed at reducing the effects of recent world events. Initially, the aim is to alleviate the pressure on purchasing power so that people with the lowest or average incomes can cope with the crises that have occurred.
"If the aim is to reduce the tax burden only on low and middle income earners, the reflection should focus on the ideal formula to achieve this goal," Lekjaa told the Moroccan parliament.
This reform will mean that these Moroccans will not have to pay more each month. The money they save will be used for other needs, since the current price of products and resources does not depend entirely on the Alawi government. In this way, this inconvenience will be addressed and the Kingdom's economic situation will be alleviated.
Lekjaa promises to reverse the fiscal curve before the end of the year. This will later be included in a new finance law in response to Moroccans' fiscal fatigue. The government will therefore involve the country's representatives in the process of slowing down tax relief. They will have to come up with good proposals to make this plan a reality by October this year. They will have the main objective of increasing the purchasing power of citizens to reduce the nation's inflation.
This project, according to the deputy minister, will be carried out through four ways that promise to be essential for the reduction of taxes. The first will be a revision of the ceiling on deductible expenses in relation to the function. These will not exceed a threshold of 30,000 dirhams, and those with an income below this figure will be the main beneficiaries of the plan.
Secondly, and related to the previous point, the increase in the income tax exemption bracket will be set at 30,000 dirhams. Next, the intention is to examine the floor and ceiling thresholds on the income tax scale in order to understand the personal needs of Moroccans and know where they need to react in order to improve their situation. And finally, the government will cut tax rates in certain brackets of the economic curve.
Thanks to this new project, Moroccans with fewer resources will be able to mitigate their situation and their prospects. Recent world events such as the coronavirus crisis, the war between Ukraine and Russia and the drought at the beginning of the year have made most basic commodities and some essential resources for living more expensive, which has severely affected those with lower incomes.
In the case of COVID-19, the passage of the virus through the country has completely destabilised the Kingdom's entire system. Several sectors, such as tourism, have been severely affected, for example, and prices have had to be increased in order to travel around the country, affecting those with the least resources.
The drought, in turn, has made it more expensive to obtain and access water, and all assistance is now needed to mitigate the effects of the recent fires raging in the north of the country.
The Ukrainian-Russian conflict, meanwhile, has led to restrictions on basic commodities such as wheat and higher petrol prices in response to Western sanctions. Russia, which largely controls the world's production of many foodstuffs, has reacted in this way, causing countries to look for more expensive alternatives that do not fully cover their needs, given that its resources are a minority of those of Moscow.