Economic impacts of tax expenditures in Morocco using a computable general equilibrium model: Case of social housing

Abstract

The goal of the work is to determine the economic impact of tax expenditures relating to social housing in Morocco on the main performances of the national economy. Our empirical approach is based on a computable general equilibrium modeling from the different simultaneous equations (analyzing the behavior of the different economic agents) on the one hand, and an impact study on the macroeconomic equilibrium on the basis of the Matrix of Social Accounting (MCS) of 2018, and with a structure based on factors of production, activities, products and institutions, on the other hand. Thus, to assess the impacts, different scenarios are formulated by modifying the tax rates by type of tax or in combination.The results showed that the lifting of social housing tax expenditures have a small effect on the macroeconomic and sectoral performance of the national economy. Overall, according to these results and except for public finance aggregates such as total tax revenue, public savings or tax pressure which respond positively to the lifting of tax expenditures, there is a real absence of significant impact of these expenditures on the Moroccan economy, which calls into question the maintenance of the tax sacrifice and the possibility the possibility of a judicious reallocation of the shortfall, in particular the possibility of turning to the direct subsidies.

Keywords: Taxation, Tax expenditures, social housing, computable general equilibrium modeling, Morocco

JEL Classification: H21, H28, M52, R31, D58.

Paper type: Empirical research