Morocco’s local governments hit by uncollected tax

Local governments in Morocco have been burdened by around $4.3 billion in lost tax revenue, and weak administrative capabilities might be to blame.

According to Moroccan-government friendly outlet Hespress, the Directorate of Local Authorities has made inquiries into what is described as a severe financial crisis. The investigation apparently scopes in on tax exemption laws as a possible explanation for the worrying deficit.

Law 82.17 in particular is reportedly largely at blame as it grants exemptions on fines and penalties, consequently depriving local governments of billions annually.

The outlet claims findings of the investigation reveal outstanding receivables have ballooned to $4.3 billion, with only $1 billion realistically retrievable. This means that local governments have a $3.3 billion gap in funds.

There are apparently growing suspicions of bureaucratic corruption as a possible explanation, and collusion between public accountants and elected officials. Local councils are supposedly losing huge amounts, specifically through cancelled surcharges, penalties, and collection fees.

Furthermore, administrative research from the past 4 years has shown a concerning increase in unpaid dues, which continue to weigh heavily on municipal budgets without effective remedies.

The arrears are allegedly also exacerbated by weak tax administration, limited staffing, lack of organisational structures, corruption, and bribery practices. Evading tax has apparently become a lot easier as a result.

At the end of 2024, the Interior Ministry reportedly conducted a series of meetings with affected local councils, confirming the record levels of arrears and delays in tax collection.

Local communities are already feeling the effects of this issue, as Maghrebi reported, people are growing frustrated with underfunded public services and a lack of investment, especially as their communities are flooded with migrants who are also seemingly neglected by the government.

As well as tax deficits, Morocco’s economy also faces a trade deficit predicted to reach 20% of GDP by 2026.

Hespress, Maghrebi.org