Morocco's 2027 Budget: Tax Cuts and Social Support

Morocco's 2027 budget, currently under parliamentary discussion, introduces social and tax measures aimed at easing the burden of inflation on households. The proposed measures include expanding social protection and reducing income tax.

Economic analysts Rashid Sari and Abd El Khaleq Tehami agree that while these measures provide temporary relief, they do not address the root causes of inflation, such as commercial intermediation costs and market chain inefficiencies.

Tehami, a researcher at the Faculty of Governance and Economic, Social Sciences at Mohammed VI Polytechnic University, noted that the previous system of universal support through a compensation fund benefited both the wealthy and the middle class. He argued that any alternative targeting method would be superior to the previous system, despite potential implementation challenges.

Sari, director of the African Center for Strategic and Digital Studies, described the budget as a continuation of a strategic path focused on cash transfers and a social protection system, while retaining some subsidies for essential goods like butane gas, wheat, and sugar. However, he raised concerns about the budget's ability to keep pace with the cost of living, highlighting indirect burdens not reflected in nominal values, such as transportation, energy, and basic goods.

Regarding tax measures, Sari noted that the budget includes positive steps, such as a gradual reform of the income tax system, expanding tax exemptions, and reducing the tax burden.

Both analysts emphasized that purchasing power cannot be protected by income redistribution alone. They called for structural reforms to boost productivity, regulate intermediation, and create added value.