Public Sector Governance and Accountability Series: Budgeting and ...

82 Salvatore Schiavo-Campo
BOX 2.5
Morocco: Reporting on Tax Expenditures
In 2005, the government of Morocco prepared a report on tax expenditures,
which was included in the budget document. The report is organized as
follows:
Chapter 1 presents the methodology used to estimate the tax expenditures:
—Definition of the scope of the study
—Definition of the baseline for each main category of taxes: (a) corporate
income tax, (b) individual income tax, (c) value added tax, (d) registration
fees, (e) customs duties, and (f) excise taxes
—Definition of the methodology for estimating the tax expenditures.
Chapter 2 presents the tax expenditures estimates. It includes both summary
and detailed presentations of tax expenditures according to
—The tax category
—The economic activity that benefits from the tax expenditures
—The objectives that the tax expenditures aim to achieve (for example,
promoting access to housing, encouraging teaching)
—The beneficiary group (enterprises, households, international organizations,
and so on).
The 2005 report has identified 337 exceptional measures that depart
from the normal structure. The total tax expenditures related to 102 of these
measures that have the most significant impact accounted for 3.4 percent of
gross domestic product and 15.7 percent of collected taxes in 2004.
Source: Ministére des Finances et de la Privatisation 2005.
A Hierarchy of Laws
Depending on their importance, the budget principles and rules can be
enshrined in descending order of legal hierarchy, in the constitution, a framework
law, other laws and regulations, administrative instructions and circulars,
and—of course—the annual budget law. These are the general criteria:
It should be cumbersome to modify the basic rules, because they must be
underpinned by a very broad consensus, and easy to modify the detailed
rules, because they are likely to require frequent modifications as circumstances
change.
Effective legal changes require consultation with the key stakeholders,
because unenforced law is no law at all and the effectiveness of enforcement
depends largely on the voluntary cooperation of those affected.