Professors Dorothée Boccanfuso and Touhami Abdelkhalek will conduct a seminar on Thursday, March 06th at 12:30 on ‘’Contribution of Fiscal Measures and Subsidies and their Impact on Poverty and Inequality in Morocco – A Shapely Decomposition’’.

ABSTRACT

Public policies, particularly those related to tax policy and subsidies, should help reduce poverty and inequality. However, the combination of the components of these two systems, as implemented, sometimes leads to an increase in poverty and/or inequality without this being necessarily visible. In this paper, based on data from the 2019 wave of the ONDH Household Panel Survey, we first describe the linkages between taxes and subsidies that lead to the observed household income. We then derive the evolution of the tax burden and the gains from subsidies for different segments of the population. In so doing, we characterize taxes and subsidies in terms of their progressiveness and regressiveness. Finally, using a Shapley decomposition, we determine the contribution of each tax and subsidy measure to poverty and inequality.

Globally, we find that the Moroccan tax system (taxes and subsidies) is progressive, reducing both poverty and inequality. We also find that some subsidies, such as those for primary and secondary education, are very pro-poor, while those for higher education are much less so. These results are useful for guiding policymaking.  This analysis is done separating rural and urban areas and make recommendations on this basis.