Unveiled on October 19, the PLF 2025 was supposed to broaden the tax base and reduce the pressure on employees subject to withholding tax as part of a reform of the Income Tax (IR). However, according to many observers, what is being presented as a step forward will not be enough to establish real tax justice. The text falls far short of the recommendations of the latest National Tax Conferences, held in Skhirat in 2019, which the El Othmani government pledged to implement.
The cause: a lack of « strong and courageous » measures to balance the distribution of tax burdens between different categories of taxpayers. For example, the Assises had recommended that all the income of a given taxpayer should be included in the same tax base, including real estate profits (rental income and capital gains) and income from movable property (dividends and interest on savings and term deposits), to obtain an overall taxable income. However, the PLF 2025 maintained the flat-rate tax and merely revised the tax scales.
Giving in to pressure
The Executive has once again bowed to pressure from lobbies and big business, who « prefer to pay 10% to 20% on dividends and profits from the sale of financial securities, rather than pay 37% tax if these incomes were added together »
« As long as we don’t synthesize all income into a global tax base, we’ll never achieve tax fairness. This is the case in most countries in the world. At present, you have income from movable property, real estate profits, and part of the income from real estate, all subject to specific rates of 10%, 15% or 20%, and which are discharged from all other taxes. It doesn’t make sense« , insists tax expert and university professor Mohamed Rahj.
For this economist, the Executive has once again bowed to pressure from lobbies and big business, who « prefer to pay 10% to 20% on dividends and profits from the sale of financial securities, rather than pay 37% tax if these revenues are added together« .
He also regrets that « strong measures« , such as the introduction of a wealth tax, have completely disappeared from debate since the arrival of the new government, proof of the influence wielded by employers in the circles of power.
« The tax authorities themselves had proposed a wealth tax on real estate at the Skhirat conference. It was never implemented, but there was a debate: some people in the government at the time (El Othmani, editor’s note) were for it, others against it, it was an option on the table. Today, we’re no longer talking about it, we’re just revising a scale« , laments Mohamed Rahj.
For the tax expert, a wealth tax and a global tax base remain the only viable means of financing the social reforms and major infrastructure projects to which the Kingdom is committed, without « mortgaging future generations » and weakening the State’s budgetary balance. « In the United States and Scandinavian countries, they pay up to 50% tax on dividends and annuity income. The gains are shared with the tax authorities. This is how we finance reforms and ensure the quality of public services. Otherwise, we’ll continue to run up debts and penalize the middle class, and we’ll never get out of it », he insists.
A mini reform
The new tax scale proposed by the government in the 2025 budget thus provides for a rate of 10% for the income bracket from 40,001 to 60,000 dirhams, 20% for that from 60,001 to 80,000 dirhams, a rate of 30% between 80,001 and 100,000 dirhams, a rate of 34% between 100,001 and 180,000 dirhams, and a rate of 37% above that.
« The middle class remains Akhannouch government’s weakest link. It’s a small reform that’s been announced (in the PLF 2025) »
This revision of the tax scale should enable tax savings of up to 400 dirhams. Not much for a middle class whose purchasing power has plummeted in recent years as inflation spirals.
« The middle class remains Akhannouch government’s weak link. It’s a small reform that’s been announced. The revision of the income tax scale affects private-sector employees and public-sector civil servants, but in reality, the tax savings to be made are between 66 dirhams and 400 dirhams maximum. This is very little for a middle class that has suffered greatly in recent years due to the high cost of living and job losses. Today, there is still no equity in the national tax effort« , insists economist Mohammed Jadri.
The revision of the income tax calculation scale nevertheless provides for an increase in the first bracket of the exemption scale, from 30,000 to 40,000 dirhams. This change will exempt all salary income below 6,000 dirhams per month. This is good news for a large proportion of public and private sector employees, as well as pensioners. But here again, analysts would have hoped for more, given the sharp fall in household purchasing power since the inflationary crisis.
« It’s a mini reform. No major effort has been made. The exempt bracket has been increased from 30,000 to 40,000 dirhams, an increase of 10,000 dirhams. This is not even a recovery of purchasing power lost to inflation. The rates have not been changed, except for the marginal rate for the top bracket, which has been reduced from 38% to 37%. Here again, the middle class is not affected, » laments Mohamed Rahj.
According to a recent study by the Haut-Commissariat au Plan, although individual incomes rose slightly between 2020 and 2022, with annual growth of 2.5% in urban areas and 2.7% in rural areas, purchasing power fell, on average, by 0.22% over the same period, with a more marked reduction in rural areas (-2.65%) compared to urban areas (-0.96%), due to the impact of inflation.
Written by Safae Hadri. Edited in English by S.E.
