economies

Article
The Impact of Tax Pressure on Long-Term Economic Growth
in Morocco
Noureddine Benkejjane 1, * , Safaa Mhatchan 2 , Mohamed Oudgou 1 and Abdeslam Boudhar 1

1 Research in Economics and Management of Organizations Laboratory (LAREMO), National School of

Business and Management, Sultan Moulay Slimane University, Beni Mellal 23000, Morocco;
[email protected] (M.O.); [email protected] (A.B.)
2 Economic and Management Sciences Studies and Research Laboratory (LERSEG), Polydisciplinary Faculty,
Sultan Moulay Slimane University, Beni Mellal 23000, Morocco; [email protected]
* Correspondence: [email protected]

Abstract: Despite the tax reform in the 1980s, the Moroccan tax system still suffers from structural
vulnerabilities that have led to inefficient tax policies and increasing sectoral disparities, which have
led to an increase in the tax pressure rates between 1990 and 2020. To overcome these vulnerabilities,
and according to the recommendations of the 2019 National Tax Conference, the Moroccan tax
system has been recently restructured, with the aim of strengthening the principles of equity and
tax efficiency. The main objective of this paper is to determine the impact of the tax pressure on
long-term economic growth in Morocco from 1990 to 2020. To do so, the methodology adopted in this
work consists of verifying the effect of the tax pressure on economic growth through a quantitative
methodology based on two vector autoregression approaches: the vector autoregression model (VAR)
and the vector error correction model (VECM). The results of this study confirm that the effect of
fiscal pressure on economic growth in Morocco is not significant in the long run, and therefore, we
can deduce that taxation is not yet a well-mastered instrument for the state to act on the economic
sphere. The results show a complex relationship between tax pressures and economic growth in
Morocco, underlining the importance of tax reform. However, the research is limited by the specific
models and the need to explore other determinants. The contribution of this paper lies in its in-depth
Citation: Benkejjane, Noureddine,
empirical analysis of fiscal pressure and its influence on long-term economic growth in Morocco,
Safaa Mhatchan, Mohamed Oudgou, as based on VAR and VECM modeling. This econometric approach makes it possible to isolate the
and Abdeslam Boudhar. 2024. The dynamic effects and responses of economic variables over time, offering an understanding of the
Impact of Tax Pressure on Long-Term interactions between tax policy and long-term economic growth. By focusing specifically on the
Economic Growth in Morocco. Moroccan context, this study offers an original perspective and helps to fill the gap in the empirical
Economies 12: 201. https://doi.org/ research in this area while providing a valuable analytical framework for assessing fiscal policies and
10.3390/economies12080201 their impact on long-term economic growth.
Academic Editor: Alessandro
Piergallini Keywords: tax pressure; economic growth; Engel and Granger approach; VAR modeling

Received: 15 May 2024

Revised: 15 July 2024
Accepted: 24 July 2024
1. Introduction
Published: 6 August 2024
Zagler and Dürnecker (2003) state that tax policy plays a key role in shaping a country’s
economic growth. Decisions about government spending and revenues have a direct
impact on the pace of growth. Expansionary fiscal policies, such as tax cuts or increases
Copyright: © 2024 by the authors. in public spending, can stimulate aggregate demand and boosting growth, especially
Licensee MDPI, Basel, Switzerland. during a recession. Conversely, restrictive fiscal policies can control inflation and stabilize
This article is an open access article the economy in periods of overheating. A well-designed tax policy also helps to reduce
distributed under the terms and social and territorial inequalities, creating an environment conducive to more inclusive
conditions of the Creative Commons and sustainable economic growth. Understanding the influence of tax policy on economic
Attribution (CC BY) license (https:// growth provides decision-makers with the tools they need to design effective economic
creativecommons.org/licenses/by/ policies tailored to the specific needs of their country.
4.0/).

Economies 2024, 12, 201. https://doi.org/10.3390/economies12080201 https://www.mdpi.com/journal/economies

Economies 2024, 12, 201 2 of 18

In this regard, an examination of the objectives of tax policy prompts us to question the
degree of influence exerted by the tax parameter on the achievement of economic growth.
Consequently, this places us in a position to assess the level of tax pressure required by the
state to achieve the objectives of optimal long-term economic growth.
In response to Morocco’s public finance crisis during the 1980s, the government
undertook a fiscal policy reform under the Structural Adjustment Plan (SAP). The aim
was to establish a modern, coherent and efficient fiscal and economic policy that would
provide sufficient financial resources to overcome the challenges posed by the crisis. The
main focus of this reform, through Framework Law No. 3.83 on tax reform, was to replace
cedulas with synthetic taxes, thereby increasing the number of taxpayers and tax revenues,
broadening the tax base, and minimizing the tax pressure.
Despite the implementation of this tax reform, the Moroccan tax system still suffers
from structural vulnerabilities that have led to inefficient tax policies and increased sectoral
disparities, resulting in higher rates of tax pressure between 1990 and 2020. To overcome
these vulnerabilities, in line with the recommendations of the 2019 National Tax Conference,
the Moroccan tax system was restructured through Framework Law No. 69.19 on Tax
Reform Fiscal (2021), aiming to reinforce the principles of fairness and tax efficiency.
The homogeneous, stable and chronically uneven distribution of tax pressure levels in
Morocco confirms that the Moroccan tax system is heavily reliant on consumers and wage
earners, leading to a reduction in labor income in favor of capital, squeezing consumption
and domestic demand.
Based on studies already carried out in Morocco, such as the work of Afifi and
Ramdaoui (2019) on the relationship between tax pressure in Morocco and economic
growth by estimating the Scully model, Salhi and Echaoui (2020) have developed a study
to model the optimal tax rate in Morocco over the period 1985–2019, and Belahouaoui
and Attak (2022) analyzed the relationship between tax pressure and taxpayer compliance
through a review of the theoretical literature. It becomes evident that there is a dearth of
studies on tax pressure and its impact on the long-run economic growth in Morocco. In
this sense, the contribution of this article lies in its in-depth empirical analysis of fiscal
pressure and its influence on long-term economic growth in Morocco, as based on VAR
and VECM modeling. This econometric approach makes it possible to isolate the dynamic
effects and responses of economic variables over time, offering an understanding of the
interactions between tax policy and long-term economic growth. By focusing specifically
on the Moroccan context, this study offers an original perspective and helps to fill the gap
in the empirical research in this area while providing a valuable analytical framework for
assessing fiscal policies and their impact on long-term economic growth.
The aim of this article is to determine the impact of tax pressure on long-term economic
growth in Morocco. The problem posed in this article is to answer the following question:
what is the impact of tax pressure on long-term economic growth in Morocco?
The methodology adopted in this work consists of verifying the effect of tax pressure
on economic growth using a quantitative methodology based on two vector autoregres-
sion approaches: the vector autoregression model (VAR) and the vector error correction
model (VECM).
This article will be subdivided into four parts: the first deals with a review of the
theoretical literature; the second is devoted to the presentation of stylized facts related to
the evolution of tax pressure rates in Morocco; the methodology of the work is presented in
the third part; and the last part is devoted to the results and discussion.

2. Literature Review
2.1. Taxation and Economic Growth
It is important to note that taxation cannot be seen as a universal solution to all
economic problems and that it needs to be designed and used strategically to maximize
its impact on growth. Furthermore, it is essential to consider the long-term economic and
Economies 2024, 12, 201 3 of 18

social consequences of taxation, as a tax that may appear beneficial in the short term may
have negative effects in the long term.
Keynes (1936) advocated the role of government intervention through fiscal policy
in influencing economic activity. He also supported the ideology that aggregate demand
stimulates an economy’s level of production. According to Keynesian theory, taxation
influences the level of disposable income and aggregate demand, thereby affecting the
quantity of production.
Solow (1956) has called into question the Harrod–Domar model of economic growth.
This model concludes that the economy is in an unstable long-term growth equilibrium
based on key parameters such as the savings rate, the capital–output ratio and the rate
of increase in the working population. However, Solow showed that this conclusion was
largely based on the fundamental assumption that production takes place under conditions
of fixed proportions. By abandoning this assumption, the concept of unstable equilibrium
seems to lose its relevance. It is therefore essential to examine tax structures carefully so
as to minimize the negative impact of taxes on economic growth while preserving budget
revenues.
The exogenous growth model underlines the risks of excessive taxation, noting its
negative impacts on investment, innovation and economic activity, while accentuating the
complexity of the relationship between taxation and external growth.
In short, taxation can have a significant impact on exogenous economic growth, but it
is important to consider the complexity of this relationship and to design taxation adapted
to the economic and social circumstances of each country.
In the 1980s, with the advent of neo-liberalism, the classical vision of taxation returned
with a vengeance, with reduced taxation and increased privatization of public services.
This approach was criticized for its impact on social inequality and its lack of support for
long-term growth.
Romer (1990) explored the concept of endogenous economic growth. This model
emphases the essential role of human capital and intentional investment in research and
development in stimulating economic growth. Thus, the relationship between economic
growth and taxation is complex, as tax policies can influence these investment decisions
and, consequently, long-term growth.
The endogenous model accentuates the impact of corruption on the ideal taxation
level by predicting an inverted U-shaped relationship between taxes and growth. These
viewpoints come together to emphasize the significance of carefully considered taxation
that can support wise public investment. They also emphasize how equitable taxation has
the power to lessen inequality, enhancing social cohesiveness and promoting sustained
economic expansion. To put it briefly, these models highlight the necessity of a just tax
system in order to support long-term economic growth.
The model of Barro et al. (1990) on growth and taxation is an economic theory that
suggests that high levels of taxation can reduce long-term economic growth by discouraging
investment and capital accumulation. According to this model, governments should
seek to maintain a balance between public spending and tax revenues to maximize long-
term economic growth. However, this model is criticized for failing to take into account
factors such as externalities and inequalities, which can have a significant impact on the
effectiveness of tax policy.
Endogenous growth economists have shown that taxation can influence economic
growth by affecting human capital accumulation, innovation, research, development and
infrastructure investment. Tax policies that favor these factors can stimulate economic
growth in the long term, while inadequate tax policies can slow it down. However, the
extent of the impact of taxation on economic growth depends on many other economic and
institutional factors, and economists do not all agree on the nature and importance of these
effects.
In recent decades, the relationship between taxation and economic growth has been
studied in greater depth, and it has become clear that the issue is complex and that there
Economies 2024, 12, 201 4 of 18

are no simple answers. Economists have stressed the importance of designing and imple-
menting tax policies that support long-term economic growth while preserving equity and
macroeconomic stability.
Engen and Skinner (1996) have researched the link between taxation and economic
growth. Their main conclusion is that taxation can have a significant impact on economic
growth but that this impact depends on the type of tax and how tax revenues are used.
They found that taxes on labor and capital can reduce investment and employment, which
can have a negative effect on economic growth. Conversely, taxes on consumption and
property have less of a negative effect on growth. Engen and Skinner also found that the
way tax revenues are used can have a significant impact on economic growth. For example,
if tax revenues are used to finance inefficient public-spending programs, this can slow
economic growth. On the other hand, if tax revenues are used to finance investment in
education, infrastructure or research, this can stimulate economic growth.
In summary, according to Engen and Skinner (1996), a well-designed tax policy can
promote economic growth by avoiding taxes on labor and capital, making judicious use of
tax revenues and reducing inefficient public spending.
In his empirical analysis of the relationship between tax pressure and economic
growth, Scully (2000) has conducted studies suggesting that high levels of tax pressure
have a negative effect on economic growth. His research examines the relationship between
taxation, economic growth and income inequality. He explores the optimal tax policy that
can promote economic growth while reducing income inequality. The author argues that
the tax system can have both positive and negative effects on economic growth and income
inequality. While taxation can be used to finance public programs and services, it can also
discourage work and investment, which can hinder economic growth.
According to Scully (2003), optimal tax policy must balance the need for revenue with
the need to promote economic growth and reduce income inequality. He suggests that
a progressive tax system, which taxes higher incomes at a higher rate, can help reduce
income inequality without significantly harming economic growth.
However, the research also indicates that tax policies need to be carefully designed
to avoid unintended consequences, such as reducing incentives to work or creating tax
loopholes for the wealthy.
Overall, Scully’s model highlights the complex relationship between taxation, eco-
nomic growth and income inequality, and it suggests that optimal tax policy requires careful
consideration of these factors.
Lee and Gordon (2005) show that corporate tax rates are significantly negatively
correlated with differences in economic growth rates between countries, even after control-
ling for other determinants of growth. In addition, fixed-effects regressions confirm that
increases in corporate tax rates lead to lower future growth rates within countries.
Arnold (2008) suggests that the composition of taxes has a significant effect on eco-
nomic growth. More specifically, property taxes, particularly recurring taxes on real estate,
appear to be the most growth-friendly, followed by consumption taxes and then personal
income taxes. By contrast, taxes on corporate profits have the most negative effect on the
GDP per capita. These findings suggest that a growth-oriented tax reform should favor
property and consumption taxes over income taxes, particularly corporate taxes.
The relationship between taxation and economic growth is a complex and multidi-
mensional area. Tax policies, such as tax rates, the structure of taxes and their impact on
incentives to work, invest and consume play an important role. Studies show that property
and consumption taxes promote economic growth, while taxes on corporate profits have a
negative effect on the GDP per capita.
Edame and Okoi (2014) show that taxation has an inverse relationship with investment:
a one percentage point increase in corporate income tax leads to a decrease in the level
of investment in Nigeria. Furthermore, taxation is positively related to public spending.
These findings underline the importance of balanced tax reform in fostering economic
growth and development.
Economies 2024, 12, 201 5 of 18

Takumah and Njindan Iyke (2015) posit that the theoretical underpinnings of taxation
and economic growth suggest negative and positive correlations between these two vari-
ables. The negative correlation is due to the distortions and suppression inherent in taxes,
while the positive correlation is indirectly due to tax-financed spending.
Alinaghi and Reed (2021) state that the relationship between taxation and economic
growth is complex and varied. While high taxes can reduce incentives to work, invest
and consume, they can also fund public goods and services that encourage economic
development and citizen well-being. To promote sustainable growth, it is essential to
design the tax system astutely so as to minimize the negative impact of taxation on growth
while preserving tax revenues.
To conclude this section, taxation, as a tool for financing public spending, plays an
essential role in economic development. Theoretical models emphasize the potential impact
of taxes on investment, innovation and long-term growth. However, the empirical reality is
more complex, as it depends on the composition of taxes, their use and the specific context
of each country. Effective tax reform, supported by sound public policies, is essential to
promote long-term economic growth. Moreover, the relationship between tax pressure and
economic growth is complex and can vary according to economic conditions, the structure
of the economy and the quality of public spending. It is therefore important to consider the
potential effects on growth when designing tax policies.

2.2. The Theoretical and Empirical Relationship between Economic Growth and Tax Pressure
The relationship between tax pressure and economic growth is a controversial topic
in economics. On the one hand, high tax pressure can dampen economic growth by
reducing the availability of capital for productive investment and discouraging companies
and individuals from earning and investing. On the other hand, lower tax pressure can
stimulate growth by encouraging investment and consumption.
The Laffer (1981) curve was modeled in 1974 by supply-side theorist Arthur Laffer and
reflects the liberal conception of redistribution as inefficient since it reduces the incentive to
work and invest. This disincentive can be explained by the role of compulsory deductions,
the Laffer curve also shows the negative effect of a high rate of compulsory deductions. It
is an old idea, as Smith (1776) states, “taxation can hinder industry in the sense of labor”.
For this theory, Adam Smith and Jean Baptiste Say have already spoken on the basic
premise of Ibn Khaldun’s writings, based on his idea that “too much tax kills tax. Adam
Smith and Jean Baptiste Say said that “an exaggerated tax destroys the base on which it is
levied, and that a reduction of the tax increases the revenue of the State, so that governments
can be sure that it is better to be moderate”.
Laffer then highlights a relationship between two variables, the first being tax revenues,
and the second being the tax rate, i.e., the share of taxes or compulsory tax deductions in
national wealth; in other words, the share of wealth deducted by the state in the broad sense.
The curve shown in Figure 1 illustrates the relationship between the tax rate and
tax revenue. On the vertical axis (ordinate) is the tax revenue, while the horizontal axis
(abscissa) represents the tax rate. Initially, a low tax rate, represented by point A on
the curve, is associated with limited tax revenue. As the tax rate increases, tax revenue
continues to rise until it reaches the optimal tax rate, marked by point E on the curve.
Beyond point E, any further increase in the tax rate results in a decrease in tax revenue.
Therefore, the same amount of tax revenue can be achieved at different levels of the tax
rate. This relationship is explained by the following figure:
It seems logical that if the tax rate is limited, the amount of tax revenue will be limited,
so increasing the tax rate results in an increase in tax revenue, but the closer you get to
the optimum tax rate, the more limited the increase in tax revenue. On the other hand,
beyond this optimum rate, increasing the tax rate results in a drop in the tax revenue, with
prohibitive rates and perverse effects.
Economies 2024, 12, 201
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Figure
Figure 1.1. Relationship
Relationship between
betweenTaxTaxRate
Rateand
andTax
TaxRevenue.
Revenue.Source:
Source:Wanniski
Wanniski(1978).
(1978).T* represents the
optimal tax rate that maximizes tax revenue. When the tax rate is below T*, an increase in this rate
leadsIttoseems
higherlogical that ifHowever,
tax revenues. the tax rate is limited,
beyond T*, tax the amount
revenues of to
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because lim-
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economic resultsand
in an increase
reduce inbase.
the tax tax revenue,
Point E, onbutthe
the closer
other you
hand, is get
the
to the optimum tax rate, the more limited the increase in tax revenue. On the other
point of deviation on the Laffer curve where tax revenues start to decline as the tax rate exceeds T*. hand,
beyond this optimum rate, increasing the tax rate results in a drop in the tax revenue, with
prohibitive
Firstly,rates and perverse
households effects.
have less incentive to work and make an effort, so they are con-
Firstly,
vinced households
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evasion. Secondly, to countries
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will move lower taxes
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(tax exits). Thea negative
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will lead to acause a reduction
reduction in wealth in
economic
and, growth.
therefore, have a negative impact on economic growth, if not cause a reduction in
The conclusion
economic growth. that can be drawn from this theoretical part is that tax pressure has a
considerable impact that
The conclusion on economic
can be drawngrowth,
from but what
this is the impact
theoretical part isof economic
that growth
tax pressure hason a
tax pressure? impact
considerable A number of empirical
on economic studiesbut
growth, of the
what relationship
is the impact between fiscal pressure
of economic growthand on
long-term
tax economic
pressure? A numbergrowth of have subsequently
empirical studies ofbeen
thecarried out. The
relationship results fiscal
between obtained differ
pressure
fromlong-term
and country toeconomic
country, depending
growth have onsubsequently
the variablesbeenusedcarried
and theout.methodology
The resultsemployed
obtained
to model
differ fromthis relationship.
country to country, depending on the variables used and the methodology
employed to modeland
Van Heerden thisSchoeman (2008) assessed the optimal size of government in terms
relationship.
of revenue and expenditure
Van Heerden and Schoeman (2008)for South Africa in order
assessed the to maximize
optimal size economic
of governmentgrowth, using
in terms
time-series data for the period 1960 to 2006. Van Heerden and Schoeman
of revenue and expenditure for South Africa in order to maximize economic growth, using (2008) showed in
their study data
time-series that South
for theAfrica’s
period average tax pressure
1960 to 2006. may beand
Van Heerden on the downward
Schoeman side
(2008) of the
showed
Laffer curve. Consequently, the tax pressure has a negative impact
in their study that South Africa’s average tax pressure may be on the downward side of on economic growth.
Keho (2010)
the Laffer curve. estimated the optimal
Consequently, the taxtax pressurehas
pressure for athe Ivorian impact
negative economy onusing both
economic
the Scully
growth. and quadratic regression models using time-series data between 1960 and 2006.
The results are not
Keho (2010) consistent
estimated thewith
optimalthe proposition
tax pressurethat higher
for the tax rates
Ivorian are detrimental
economy using both
to growth.
the Scully and quadratic regression models using time-series data between 1960 and 2006.
Takumah and Njindan Iyke (2015) explored the causal influence of tax revenues on
The results are not consistent with the proposition that higher tax rates are detrimental to
economic growth in Ghana over the period 1986–2014. The results of this research provided
growth.
strong evidence of a unidirectional causal flow of tax revenues to economic growth in
Takumah and Njindan Iyke (2015) explored the causal influence of tax revenues on
Ghana. These results are in line with existing findings that taxation can influence economic
economic growth in Ghana over the period 1986–2014. The results of this research pro-
growth. The policy implication is quite clear.
vided strong evidence of a unidirectional causal flow of tax revenues to economic growth
in Ghana. These results are in line with existing findings that taxation can influence eco-
nomic growth. The policy implication is quite clear.
Economies 2024, 12, 201 7 of 18

Saibu (2015) estimated the optimal tax rates for South Africa using quarterly data for
the period 1994–2016, employing an ARDL bounds testing approach. The results revealed
that there is no significant relationship between taxation and economic growth over the
period studied.
Chokri et al. (2018) have attempted to study the relationship between the level of tax
pressure and the growth rate for the Tunisian case with the estimation of the optimal tax
rate between 1966 and 2015. The methodology adopted in this study consists of two stages.
In the first stage, the optimal tax rate is determined using Scully’s static model and the
quadratic model. The second stage focuses on the long-term relationship. This research is
based on the results of the unit root and cointegration tests on the Scully model. The results
of the study support the idea that taxes reduce growth beyond a certain threshold. The
basic model yielded an optimal tax rate equal to 19.6% of the GDP. The use of time-series
cointegration techniques enabled a long-term analysis to be carried out, yielding an optimal
tax rate of 14% of the GDP. The current tax rates are well above these levels, which explains
the disappointing performance in terms of growth and taxation.
Koatsa et al. (2021), in their work, tried to determine whether tax pressure has an
impact on the economic growth rate in the Lesotho context and to estimate an optimal
tax pressure over the period 1988–2017. The ARDL bounds test framework was used to
establish cointegration and determine whether there is a long-term relationship between tax
pressure and economic growth. The results established a cointegration relationship between
economic growth rate and fiscal pressure, with unidirectional causality running from
economic growth to fiscal pressure. Granger causality revealed no causal effect between
fiscal pressure and economic growth in Lesotho. The results show that tax policy has had no
significant influence on economic activity in Lesotho over the period studied. However, the
results of the error correction model indicate a long-term relationship between the economic
growth rate and tax pressure in Lesotho, with a long-term equilibrium adjustment speed of
100% following a short-term shock.
Based on these studies, we can see that there is still no consensus on the relationship
between tax pressure and economic growth.
An initial series of studies by Van Heerden and Schoeman (2008) in South Africa and
Keho (2010) in Côte d’Ivoire found that tax pressure has a negative impact on economic
growth, while a second series of studies by Takumah and Njindan Iyke (2015) in Ghana
found that taxation can influence economic growth, and a third study by Saibu (2015) in
South Africa confirmed the findings of Van Heerden and Schoeman (2008) and showed that
there is no significant relationship between tax pressure and economic growth. Chokri et al.
(2018) found that in Tunisia, an increase in tax rates explains a disappointing performance
in terms of taxation and economic growth. The latest series of studies by Koatsa et al. (2021)
in Lesotho showed that in the short-term, tax pressure does not influence economic growth,
but on the basis of the error correction model, there is a long-term relationship between tax
pressure and economic growth.
This last study is like the objective of this empirical work, which is to study the impact
of fiscal pressure on long-term economic growth in Morocco.
Assumptions:

H0. Tax pressure has an impact on long-term economic growth.

2.3. Tax Pressure and Economic Growth in Morocco

The Moroccan government’s tax revenues come from a number of taxes. However, the
structure of this revenue shows that Value Added Tax (VAT), Income Tax (IC), Corporation
Tax (CT), Registrations and Stamps and Internal Consumption Tax (ICT) are the main
sources of tax revenue for the state (Figure 2).
Economies 2024, 12, 201
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VAT CT IT ICT Reagistrations and stamps Customs duties

4.60%
29.00% 23.10% 19.90% 14.10% 7.10% 4.60% 7.40%
2.30%
4.60% 13.80%
29.00% 23.70% 20.20% 13.50% 7.20%
4.30% 1.70%
20.20%
20% 13.60% 7.40% 4.80%
28.30% 25.00% 1.40%

20.70% 13.80% 6.10% 23.80%

28.00% 22.70% 8.40% 1.60%

13.10% 1.50%
18.90% 7.30%
28.60% 24.60%
13.40%
28.50%
20.60% 17.40% 2.00%
22.50% 17.90% 6.40%

MEAN MEAN 2016 2017 2018 2019 2020 MEAN

2000-07 2008-15 2016-20

Figure 2. Breakdown of tax revenues in Morocco by the type of tax between 2000 and 2020. Source:
Figure 2. Breakdown of tax revenues in Morocco by the type of tax between 2000 and 2020. Source:
The Treasury and External Finance Department of the Moroccan Ministry of the Economy and Fi-
The Treasury and External Finance Department of the Moroccan Ministry of the Economy and Finance.
nance. Revenue excluding VAT from local authorities, as mentioned by (Omar and Aya 2021).
Revenue excluding VAT from local authorities, as mentioned by (Omar and Aya 2021).
According to Figure 2, VAT, CT, IT and registration fees are the main tax revenues in
According to Figure 2, VAT, CT, IT and registration fees are the main tax revenues in
the structure of state tax revenues, with an average of 26.53% for VAT revenues, 22.1% for
the structure of state tax revenues, with an average of 26.53% for VAT revenues, 22.1% for
CT,
CT, 19.9%
19.9% for
for IT
IT and 14.77% for
and 14.77% for registration
registration and
and stamps
stamps between
between 2000
2000 and
and 2020.
2020.
During the period 1990–2020, the tax pressure and the growth
During the period 1990–2020, the tax pressure and the growth rate of the rate of the real GDP
real GDPas
an annual
as an annualpercentage
percentage in in
Morocco
Moroccohave
haveundergone
undergoneprofound
profoundchanges
changesaccording
according to to data
data
collected from the International Monetary Fund, as shown in the following
collected from the International Monetary Fund, as shown in the following graph: graph:
During
During the
the period
period 1990–2000,
1990–2000, Morocco
Morocco undertook
undertook aa series
series of
of political,
political, social,
social, financial
financial
and economic reforms, as well as implementing the Framework
and economic reforms, as well as implementing the Framework Law on taxation Law on taxation andand
re-
forming the national tax system through the Finance Acts during this period,
reforming the national tax system through the Finance Acts during this period, with the with the aim
of
aimcatching up on
of catching upaccumulated
on accumulateddelays in economic
delays andand
in economic social development.
social development. According
According to
Figures 3 and
to Figures 3 and 4, 4,
taxtaxpressure
pressureininMorocco
Moroccounderwent
underwentvarious
variouschanges
changes overover the
the period
period
1990–2000,
1990–2000, decreasing
decreasing by by 0.48%
0.48% from
from 21.26%
21.26% in
in 1990
1990 to
to 20.78%
20.78% in
in 2000,
2000, i.e.,
i.e., an
an average
average tax
tax
pressure of 20.15% between 1990 and 2000, with an economic growth
pressure of 20.15% between 1990 and 2000, with an economic growth rate of 3.15% rate of 3.15%
overover
the
the
samesame period.
period.
The first “Taxation Assizes”, held in 1999, provided an opportunity to reflect on the
mechanisms for simplifying, streamlining and harmonizing the tax system. Numerous
reforms were introduced by successive Finance Acts from 2000 to 2011, resulting in a series
of measures to simplify, rationalize and harmonize the tax system, including the reform of
registration duties in 2004, the start of VAT reform in 2005, the consolidation of tax texts
into a single volume, the General Tax Code published in 2007, and the reform of the income
tax scale in 2009, adding to the financial crisis that hit the world in 2007 and 2008. Over the
period 2000–2010, the rate of tax pressure rose sharply from 20.78% in 2000 to 24.78% in
2010, an increase of 4 points, with the highest rate recorded in 2008 at 28.88%, while the
geometric average rate of tax pressure over the period 2000–2010 was 23.24%, an increase
of 3.09% on the 1990–2000 period, with an average economic growth rate of 4.68%. Despite
 Economies 2024, 12, 201 9 of 18

the increase in tax pressure between the two periods, the economic growth rates themselves
Economies 2024, 12, x FOR PEER REVIEW 9 of 19
Economies 2024, 12, x FOR PEER REVIEW increased by 1.53%, a finding that contradicts the data in the theoretical literature review.
9 of 19

Figure
Figure3.3.
Evolution
Evolutionofof
the taxtax
the pressure
pressurerate forfor
rate the period
the period1990–2020. Source:
1990–2020. International
Source: Monetary
International Monetary
Fund
Figure for tax pressure
3. Evolution
Fund and
of the tax
for tax pressure the real
pressure
and GDP
the realrate
GDP growth
forgrowth rate
the period (https://www.imf.org/en/Countries/MAR,
rate1990–2020. Source: Research and Financialac-
(https://www.imf.org/en/Countries/MAR,
cessed
ForecastingonDepartment
accessed 28
onMarch
28 March2022), Research
(2008),
2022), andand
Elbaggari
Research Financial
(2023). Forecasting
Financial ForecastingDepartment
Department(2008), Elbaggari
(2008), (2023).
Elbaggari (2023).

Figure 4. Evolution of the real GDP growth rate for the period 1990–2020. Source: International
Monetary
Figure 4.Fund for taxofpressure
Evolution the realand
GDPthegrowth
real GDPrategrowth
for the rate (https://www.imf.org/en/Coun-
period 1990–2020. Source: Interna-
Figure 4. Evolution
tries/MAR, of on
accessed the28
real GDP2022),
March growth rate forand
Research theFinancial
period 1990–2020.
Forecasting Source: International
Department (2008), El-
tional Monetary Fund for tax pressure and the real GDP growth rate (https://www.imf.org/en/
Monetary Fund
baggari (2023). for tax pressure and the real GDP growth rate (https://www.imf.org/en/Coun-
Countries/MAR,
tries/MAR, accessed onaccessed
28 Marchon 2022).
28 March 2022), Research and Financial Forecasting Department (2008),
Elbaggari (2023).
The first “Taxation Assizes”, held in 1999, provided an opportunity to reflect on the
The first “Taxation
mechanisms Assizes”, held in 1999,and
for simplifying, provided an opportunity to reflect on the
Since 2010, Morocco hasstreamlining
launched a series of harmonizing the tax (the
structural reforms system.
2011 Numerous
constitution,
mechanisms
reforms for introduced
were simplifying,bystreamlining
successive and harmonizing
Finance Acts the tax
from 2000 system.
to 2011, Numerous
resulting in a se-
the organic laws governing local authorities, the organic finance law, the tax framework
reforms
ries were introduced by successive Finance Acts from 2000 to 2011, resulting in a se-re-
lawoffollowing
measuresthe to recommendations
simplify, rationalize andnational
of the harmonize the tax system,
tax conference in 2019,including
and the the
reforms
riesform
of measures to
of registrationsimplify, rationalize
dutiesofinthe2004, and harmonize
the startcrisis).
of VAT the
reformtax system,
intax
2005, including the
the consolidation re- of
introduced in the wake COVID-19 The rate of pressure increased from
form
tax of registration
texts into duties
a single in
volume, 2004, the
thegiving start
General of VAT reform
Tax Code average in
published 2005,
in ofthe
2007, consolidation
and ofthetax
reformof of
24.78% in 2010 to 27% in 2020, a geometric rate 24.99% pressure
taxthetexts into
income
over a single volume,
tax scale period,
the 2010–2020 the
in 2009,while General
addingtheto Tax Code
the financial
average published
rate of crisis in 2007,
that growth
economic and
hit the world the
fell fromreform
2007of
in 4.68% and
over
the2008.
incomeOvertaxthescale in
period 2009, adding
2000–2010, theto the
rate financial
of
the 2000–2010 period to 2.54% over the 2010–2020 period.tax crisis
pressure that
rose hit the
sharply world
from in 2007
20.78% and
in 2000
2008. Over the
to 24.78% in period
2010, an2000–2010,
increase ofthe rate of with
4 points, tax pressure roserate
the highest sharply from in
recorded 20.78%
2008 at in28.88%,
2000
to 24.78% in 2010, an increase of 4 points, with the highest rate recorded
while the geometric average rate of tax pressure over the period 2000–2010 was 23.24%, in 2008 at 28.88%,
while the geometric
an increase average
of 3.09% on therate of tax pressure
1990–2000 period, over
with the period 2000–2010
an average economic was growth23.24%,
rate of
an4.68%.
increase of 3.09% on the 1990–2000 period, with an average economic
Despite the increase in tax pressure between the two periods, the economic growth rate of
growth
4.68%. Despite the increase in tax pressure between the two periods, the economic growth
Economies 2024, 12, 201 10 of 18

Since 2020, due to the COVID-19 pandemic, which triggered an economic crisis, global
economic growth has plummeted from 3% to −6.3%. To mitigate the adverse effects of this
crisis, governments and central banks have implemented fiscal and monetary measures on
an unprecedented scale (Benmelech and Tzur-Ilan 2020).
In Morocco, the crisis significantly impacted key sectors of the economy (tourism,
transportation, textiles, and industry, among others), causing the growth rate to decline
from an average of 4.1% between 1999 and 2019 to −7.2% in 2020. This critical situation
prompted the Moroccan government to intervene through budgetary, monetary, and fiscal
policies aimed primarily at mitigating the effects of the economic crisis. The measures
included the establishment of a Special Fund for managing the COVID-19 pandemic to
provide direct assistance and subsidies to vulnerable households and businesses, the
postponement of financial and tax deadlines, the adoption of a supplementary budget in
2020, and the reduction of the policy interest rate to as low as 1.5%, supplemented by the
activation of a USD 3 billion liquidity line from the International Monetary Fund (IMF).
Moreover, the COVID-19 crisis accelerated reforms to the Moroccan tax system be-
tween 2020 and 2023. The key measures included the adoption of Framework Law No.
69.19 on Tax Reform Fiscal (2021), the creation of the Unique Professional Contribution
(CPU), reductions in corporate income tax (CIT) and Value Added Tax (VAT), as well as
exemptions and tax deductions for sectors affected by the COVID-19 pandemic.
Although the Moroccan government’s intervention significantly mitigated the eco-
nomic effects of the COVID-19 health crisis, it also led the national economy, similar to
developed and developing economies, into an inflationary spiral (from 0.7% in 2020 to 6.7%
in 2022), high fiscal pressure (27.3% in 2020 to 22.6% in 2023), a substantial budget deficit
(7.5% of GDP in 2020), and a significant decline in tax revenues of more than 79%. This
situation aligns with the findings of Silva (2021), suggesting that expansionary fiscal policies
increase government deficits, which in turn affect the profitability of the banking sector.
Furthermore, high inflation exacerbates fiscal deficits, given the risks of fiscal dominance.
On a panel concerning Morocco and 33 OECD African countries, the OCDE (2023)
stated the following:
Between 2010 and 2021, the increase in the average tax-to-GDP ratio in Africa, as
presented in Figure 5, was mainly attributable to higher VAT and personal income tax
revenues. In 2021, taxes on goods and services remained the main source of tax revenue in
Africa, accounting for 51.9% of the total tax revenue on average, with VAT contributing
27.8%. Taxes on income and profits provided 37.9% of tax revenues. For 24 of the African
Economies 2024, 12, x FOR PEER REVIEW 11 of 19
countries included in this report, taxes on goods and services were the primary source of
tax revenue, while in nine other countries, taxes on income and profits predominated.

Figure 5.
Figure 5. Tax
Tax revenue
revenue statistics:
statistics: tax/GDP
tax/GDP ratio.
ratio. Source:
Source: Data
Data from
from OCDE
OCDE (2023).
(2023).

Between
Between 2020
2020 and
and 2021,
2021, revenue
revenue from
fromtaxes
taxes on
on goods
goods and
and services
services rose
roseby
by an
an average
average
of 0.2% of the GDP, representing a modest rebound after a fall of
of 0.2% of the GDP, representing a modest rebound after a fall of 0.4% of 0.4% of the GDP in 2020,
attributable
attributable to
to the
the impact
impact of of the
the COVID-19
COVID-19 pandemic.
pandemic. In this category,
category, VAT
VAT receipts
receipts rose
rose
by
by 0.1
0.1 percentage
percentage points
points in
in 2021,
2021, marking
marking aa slight
slight rebound
rebound after
after aa 0.3
0.3 percentage
percentage point
point
decline between 2019 and 2020. Income tax receipts fell slightly by 0.1 points on average
in 2021, mainly due to lower corporation tax receipts over this period, after remaining
stable between 2019 and 2020. Social security contributions fall by 0.1 points in 2021, fol-
lowing a similar increase in 2020.
Economies 2024, 12, 201 11 of 18

decline between 2019 and 2020. Income tax receipts fell slightly by 0.1 points on average in
2021, mainly due to lower corporation tax receipts over this period, after remaining stable
between 2019 and 2020. Social security contributions fall by 0.1 points in 2021, following a
similar increase in 2020.

3. Data and Methodology

3.1. Data
This study uses annual time series for a 30-year period from 1990 to 2020. The choice
of this period is mainly motivated by data availability and the structural changes that
Morocco has undergone over the years (The data used are limited to 1990–2020, because the
tax reform in Morocco took place in 1983, giving rise to the main taxes, so data availability
only concerns the period studied). The data sample is based on statistics drawn from
the International Monetary Fund (IMF) database for the growth rate of the real GDP and
Research and Financial Forecasting Department of Moroccan Ministry of the Economy and
Finance for the pressure tax rate. The aim is to examine the causal relationship and the
impact of economic growth on fiscal pressure in Morocco.
It is important to emphasize that the period of the COVID-19 crisis was not included
in this analysis due to its exceptional and unusual characteristics. Given that our study
focuses on long-term trends, this exclusion was necessary to ensure the relevance and
consistency of the results.
To this end, the econometric models in this article deal with two variables of interest.
On the one hand, the growth rate of the real GDP as a dependent variable that measures
economic growth relative to the gross domestic product (GDP) from one period to the next,
adjusted for inflation and expressed in real terms as opposed to nominal terms. On the
other hand, the tax pressure rate as an independent variable remains the most widely used
indicator for determining the weight of taxation in an economy. Similarly, this rate reflects
tax policy and provides information on the totality of the tax measures undertaken by the
state, while taking into account the collection capacity of the tax administration.
It should be noted that the calculation of tax pressure here only covers tax revenues
and not all compulsory levies, notably social security contributions, as these are considered
to be resources earmarked for redistribution operations, and their purpose is to modify the
distribution of income. On the other hand, in this study, we will examine taxes as such,
i.e., all the direct and indirect contributions collected by public administrations, excluding
social contributions.
The choice of variables adopted to study the relationship between tax pressure and
economic growth in Morocco draws on the work of Van Heerden and Schoeman (2008),
Takumah and Njindan Iyke (2015), Saibu (2015), Chokri et al. (2018), and Koatsa et al.
(2021), limited to the growth rate of the real GDP and the rate of tax pressure excluding
social contributions. This study focuses solely on the impact of direct and indirect taxes on
economic growth.
For a comprehensive understanding of the variables, Table 1 below provides defini-
tions and data sources.

Table 1. Definitions and data sources.

Variable Abbreviation Measure Source

Total tax revenues Research and Financial Forecasting

Tax pressure rate PF GPD × 100
Department (2008), Elbaggari (2023)
International Monetary Fund (IMF):
GPD t − GPD t−1
Growth rate of real GDP GPD_t GPD t−1 × 100 https://www.imf.org/en/Countries/MAR,
accessed on 28 March 2022
Source: Authors.
Economies 2024, 12, 201 12 of 18

3.2. Methodology
3.2.1. Model Selection
The theoretical aspect of this research was complemented by an empirical study. This
was carried out using a quantitative methodology based on two approaches to vector
autoregression: the vector autoregression model (VAR) and the vector error correction
model (VECM).
Vector autoregressive modeling (VAR) aims to describe the interdependencies between
all the variables. In fact, the generalization of the VAR representation to k variables and p
shifts (noted VAR(p)) is written in matrix form:

Y_t = A_0 +A_1 Y_t−1 + . . . + A_p Y_t−p +V_t (1)

 0   
 1 k  a1 V1t
a21i ...
 
Y1,t a1i a1i  a0
k ; V_t =  V2t 
  
With Y_t =  .. ; A_i̸=0 =  a12i a22i ... a2i ; A_0 = 
 ..
2
  .. 
Yk,t a1ki a2ki ... akki
a0k Vkt
Of which:
Y_t = (Y1,t , Y2,t , ..., Yk,t ), a vector of k endogenous variables introduced into the system,
where each variable constitutes an equation.
A_i̸=0 is the matrix of coefficients of order k × k to be estimated.
V_t = (V1t , V2t , ..., Vkt ), vector of shocks assumed to be non-autocorrelated white noise
of constant variance.
The aim is to understand the dynamic behavior of variables that are linearly dependent
on the past. Moreover, by considering the relationships between several variables, the
model makes it possible to explain, not just describe, the evolution of a series. The method
for estimating the VAR model is as follows. First, study the stationarity of the variables,
then determine the number of lags (p) using the information criteria to determine the
optimal VAR. The latter must be validated by the significance of the coefficients and the
analysis of the residuals.
It is also necessary to specify the model in econometric form. Ultimately, this model
will take the following simple form:

GDP_t = α_0 +β_1 PF_t−1 +ε_t (2)

Of which:
• GDP_t The real economic growth rate in period t
• PF Tax rate.
• α0 Model constant.
• ε_t : Model error: variables not considered in period t.
In fact, the VAR model alone cannot measure the relationship between economic
growth and tax pressure, which is why it is often combined with the vector error correction
model (VECM). This model examines short-term causality as well as long-term Granger
causality. This is because many variables may show opposite trends in the short term, but
cointegration means that they all converge in the end.
Reconsidering the VAR in Equation (1), it can be rewritten as a vector error correction
model (VECM):
p−1
∆Y_t = ∏ Y_t−1 +∑i=1 Γ_i ∆Y_t−i +V_t (3)
With:
• ∆Y_t : represents the differenced series at time t, which is the change in the variable of
interest from the previous period.
• ∏: is the autoregressive parameter, and Y_(t − 1) represents the variable of interest at
time t − 1.
Economies 2024, 12, 201 13 of 18

p−1
• The summation term ∑i=1 : represents the autoregressive component of the model. It
includes p − 1 lags of the differenced series, where p is the order of the autoregressive
process.
• Γ_i : represents the coefficient associated with the i-th lag of the differenced series ∆Y_(t − i).
• V_t : represents the error term at time t, which captures the random or unexplained
component of the model.
In fact, this vector error correction model (VECM) will take the following form:

∆GDP_t = α_0 +α_1 ∆GDP_t−1 + .. + α_P ∆GDP_t−P + β_1 PF_t−1 + .. + β_P PF_t−P +Yε_t−1 + U_t (4)
With:
εt−1 delayed value of the error correction term (TCM).
As with VAR, the VECM procedure is as follows: the optimum lag length for the
model must be determined. To accomplish this, we begin by determining the number of
lags p in the VAR(p) model using the information criteria (Akaike and Schwarz).
Next, we need to test the stationarity of the residuals. If they are stationary, then there
is a long-term relationship, and we can then estimate the VECM and study the significance
of the coefficients.

3.2.2. Preliminary Tests

The all-study variables are annual series, from 1990 to 2020, as shown in the table below.
Table 2 summarizes the descriptive statistics of the variables used in the estimation.
The average real GDP growth rate is 3.6347%, with a minimum value of −7.1871% and a
maximum value of 12.3729%.

Table 2. Descriptive characteristics of the variables used.

Tax Rate Real GDP Growth Rate

Average 22.9086 3.6347
Std. Devi 2.7602 4.0805
Maximum 28.8808 12.3729
Minimum 18.4564 −7.1871
Skewness 0.1655 −0.5553
Kurtosis 1.9637 3.8498
Jarque–Bera 1.5780 2.6075
Probability 0.4543 0.2715
Source: Authors (our calculations based on Eviews 12).

As indicated in Table 2, the mean tax pressure rate is 22.9086%, with a minimum value
of 18.4564% and a maximum value of 28.8808%. The standard deviation for this variable,
as well as for the real GDP growth rate, is low, reflecting minimal volatility and thereby
reducing associated risks. Both variables exhibit non-zero skewness coefficients; specifically,
the tax rate series shows rightward asymmetry, while the real GDP growth rate displays
leftward asymmetry. Additionally, the kurtosis coefficients for both variables are positive,
suggesting that their distributions are flatter compared to a normal distribution. According
to Table 2, the Jarque–Bera test probability for both series exceeds the 5% significance level,
indicating that there is insufficient evidence to reject the null hypothesis (H0).
Before estimating the VAR model, a stationarity test is required to check the series and
avoid problems with spurious regressions. We use the augmented Dickey–Fuller (ADF)
test and the Phillips and Perron (PP) test. The results of the variable stationarity test are
shown in the table below.
The stationarity study, as shown in Table 3, indicates that both the real GDP growth
rate and the tax pressure rate are non-stationary in levels. However, after differencing, the
time series become stationary, as the t-statistics (−5.8266% and −9.6682%) fall below the
Economies 2024, 12, 201 14 of 18

critical values at the 5% threshold (−1.9525% and −1.9529%), respectively. Therefore, their
probability is less than 5%.

Table 3. Stationarity test results.

Test Results at 5% Threshold

Augmented Dickey–Filler (ADF) Philips and Perron (PP) Stationarity
Variables
Critical Value t-Statistic Critical Value t-Statistic Stationarity
GDP −1.9525 −5.8266 −1.9525 −5.8351 I (1)
PF −1.9529 −9.6682 −1.9525 −31.5905 I (1)
Source: Authors (our calculations based on Eviews 12).

4. Results and Discussion

To run the VAR model, it is first necessary to determine the optimum number of lags.
To accomplish this, we use four information criteria (Akaike (AIC), sequential modified LR
test statistic (LR), final prediction error (FPE), Hannan–Quinn (HQ)). The selection principle
is to retain the number of delays equal to the one that minimizes the four selection criteria.
In this study, we retain the number of lags 2, i.e., we will estimate a VAR (2) second-order
autoregressive model. Based on the VAR model, the estimation results are as follows.
By comparing the t-statistics with the critical value (1.96), as shown in Table 4, we
can conclude that the real GDP growth rate depends on its past values, meaning that each
shock to this variable will subsequently have an impact on it. However, the results confirm
that the past values of the tax pressure have had no impact on either the growth rate or the
tax pressure itself.

Table 4. Estimation of the VAR model.

DGPD DPF
Variables Correlation Standard Correlation Standard
t-Statistic t-Statistic
Coefficient Deviation Coefficient Deviation
DGPD (−1) −1.2899 0.1813 −7.1132 0.1145 0.0729 1.5700
DGPD (−2) −0.5910 0.1740 −3.3967 0.05163 0.0700 0.7378
DPF (−1) 0.3127 0.5595 0.5590 0.0260 0.2250 0.1155
DPF (−2) 0.1002 0.5821 0.1722 −0.2899 0.2341 −1.2387
C −0.4035 0.7041 −0.5731 0.2071 0.2831 0.7315
R-squared 0.7788 0.1444
Source: Authors (our calculations based on Eviews 12).

To interpret the results of the VAR (2) model, we need to test its econometric robustness.
According to Table 4, the inverse test of the roots of the characteristic polynomial is used to
test the stationarity of the model, where all the roots must lie inside the unit circle.
We note that all the eigenvalues lie within the unit circle, as illustrated in Figure 6.
Thus, the VAR (2) model is stationary, and the variables follow a normal distribution. In this
respect, we can conclude that the model is valid and ready to be interpreted. Furthermore,
if we examine causality in the Granger sense, we can see the following.
Indeed, the impact of tax pressure on economic growth has not been verified. This can
be explained by the specific nature of the Moroccan tax system. The succession of reforms
to the tax system over the 1990–2020 study period reflects the government’s determination
to adapt the tax policy to the country’s economic evolution. These reforms generally
follow international trends and seek to make taxation more growth friendly. However,
despite the progress made, the Moroccan tax system continues to suffer from a number of
constraints, including the superiority of indirect taxes over direct taxes, due to the size of the
informal economy, fraud and tax evasion, low tax rates, exemptions for certain sectors, and
 R-squared 0.7788 0.1444
Source: Authors (our calculations based on Eviews 12).

To interpret the results of the VAR (2) model, we need to test its econometric robust-
Economies 2024, 12, 201 ness. According to Table 4, the inverse test of the roots of the characteristic polynomial 15 of 18
is
used to test the stationarity of the model, where all the roots must lie inside the unit circle.
We note that all the eigenvalues lie within the unit circle, as illustrated in Figure 6.
inadequate
Thus, the VARcontrol. These difficulties
(2) model hamper
is stationary, thevariables
and the growth offollow
direct atax resources,
normal prompting
distribution. In
the
thisstate to concentrate
respect, on indirect
we can conclude taxation,
that the model and consequently
is valid and ready increasing the problem
to be interpreted. Further-of
failing
more, iftowe
harness taxation
examine to promote
causality economic
in the Granger growth.
sense, we can see the following.

-1

-2
-4 -3 -2 -1 0 1

Figure 6.
Figure 6. VAR
VAR stationarity
stationarity test
test (2).
(2). Source:
Source: Authors
Authors (our
(our calculations
calculations based
based on
on Eviews
Eviews 12).
12).

In this respect
Indeed, and of
the impact based on the results
tax pressure of the VAR
on economic growth model andbeen
has not the causality test
verified. This
presented in Tableby
can be explained 5, we
the can see that
specific several
nature determinants
of the Moroccan tax cansystem.
impact economic growth
The succession of
in Morocco,
reforms apart
to the tax from
system taxover
pressure, and thatstudy
the 1990–2020 the value
periodof real GDP
reflects theis government’s
influenced by de- its
past values. Over
termination the period
to adapt the tax1990–2020,
policy to the Moroccan economy was
country’s economic affectedThese
evolution. by structural
reforms
transformations
generally followand economic crises,
international trendswhich
and led to to
seek changes
make in the pacemore
taxation and level of economic
growth friendly.
growth.
However, The 2008–2009
despite financialmade,
the progress and economic crisis impacted
the Moroccan tax system Morocco’s
continues economic
to suffergrowth
from a
for several years, with the deterioration in economic activity in Morocco’s
number of constraints, including the superiority of indirect taxes over direct taxes, partner countries
due to
transmitted
the size of the with a time lag
informal through
economy, four and
fraud maintaxchannels:
evasion, foreign
low taxdemand addressed for
rates, exemptions to
Morocco, tourism
certain sectors, andreceipts,
inadequatetransfers from
control. Moroccans
These difficulties living
hamperabroad
the(MLA),
growth and foreign
of direct tax
direct investment
resources, prompting(FDI).the state to concentrate on indirect taxation, and consequently in-
creasing the problem of failing to harness taxation to promote economic growth.
Table 5. Causality test.
In this respect and based on the results of the VAR model and the causality test pre-
sented in Table Null5,Hypothesis
we can see that several determinants
F-Statistic can impact economic Prob growth in
Morocco, apart from tax pressure, and that the value of real GDP is influenced by its past
DPIB does not Granger cause DPF 1.4997 0.2434
values.
DPFOver
does the period cause
not Granger 1990–2020,
DPIB the Moroccan economy was affected
0.1893 by structural
0.8288
transformations and economic crises, which led to changes in the pace and level of eco-
Source: Authors (our calculations based on Eviews 12).
nomic growth. The 2008–2009 financial and economic crisis impacted Morocco’s economic
growth for same
In the several years, with
context, 2020 the
willdeterioration
be marked by in an
economic activity in
unprecedented Morocco’s
economic partner
recession.
countries transmitted with a time lag through four main channels:
As a result, the rate of economic growth slowed down this year, affecting the years thatforeign demand ad-
dressed to Morocco, tourism receipts, transfers from Moroccans living
followed, notably 2021 and 2022. We can therefore conclude that several factors other thanabroad (MLA), and
foreign
fiscal direct investment
pressure influence short-(FDI).and long-term economic growth, and that the evolution of
the real GDP growth rate depends on past values.
Table 5. Causality test.
The VAR model assumes that the series are stationary. In this case, the series used
are non-stationary. By differentiating them sufficiently,
Null Hypothesis F-Statisticwe can stationarize them. This
Prob
operation has its limits, however,
DPIB does not Granger cause DPF particularly if the variables
1.4997 share one or
0.2434 stable
more
long-term relationships. In this case, using the Engel–Granger cointegration test, as detailed
DPF does not Granger cause DPIB 0.1893 0.8288
in Table 5, we have tested the stationarity of the residuals resulting from this estimation. If
Source: Authors (our calculations based on Eviews 12).
they are stationary, then there is a long-term relationship; otherwise, the procedure stops
here.
The analysis shows that the null hypothesis of the unit root is rejected, as detailed
in Table 6. The residuals of a long-term relationship are stationary in nature, confirming
the existence of a cointegration relationship between the growth rate of real GDP and
tax pressure. However, the existence of a long-run relationship paves the way for the
estimation of the error-correction model.
According to Granger’s representation theorem, any cointegrated system implies the
existence of an error-correcting mechanism that prevents variables from deviating too far
from their long-term equilibrium.
Economies 2024, 12, 201 16 of 18

Table 6. Residual stationarity test.

T-Statistic Prob
Augmented Dickey–Fuller test statistic −4.8586 0.0000
Source: Authors (our calculations based on Eviews 12).

The coefficient associated with the force of the return to equilibrium is significantly
negative (−0.3939%), as shown in Table 7. This indicates the presence of an error-correction
mechanism. The mechanism reflects the convergence of the GDP series trajectories toward
the long-term target. Specifically, following a shock, the GDP response variable returns to
equilibrium at a rate of 39%, meaning that the shock is fully resolved after approximately
two years and six months (1/0.3939 = 2.53).

Table 7. Vector error-correction model using Granger’s approach.

Variable Coefficient Std. Error t-Statistic Prob

C 0.2013 0.1647 1.2222 0.2405
DLGPF (−1) −0.0883 0.2313 −0.3820 0.7078
DLPF (−1) 3.4894 2.7793 1.2555 0.2285
DLPF 0.0800 2.8377 0.0282 0.9779
RESID LT (−1) −0.3151 0.1237 −2.5470 0.0223
R-squared 0.6059
C 0.2563 0.1477 1.7350 0.0981
RESID LT (−1) −0.3939 0.0748 −5.2630 0.0000
R-squared 0.5807
Source: Authors (our calculations based on Eviews 12).

This result was highlighted by Widmalm (2001), according to whom the share of
public spending coming from tax revenues contributes to improving productivity and
consequently economic growth. Keho’s empirical work also confirms these results. He
examined the problem of tax levies on economic activity in Côte d’Ivoire. Using cointegra-
tion and causality tests on annual data covering the period from 1960 to 2006, the author
obtained long-term evidence of a relationship between taxation and GDP. Thus, he asserted
that taxation does not hinder growth in the long term and that tax revenues are positively
correlated with the GDP and its components.
The results of the two approaches—the vector autoregression model (VAR) and the
vector error correction model (VECM)—reveal the existence of a relationship between tax
pressure and economic growth over the period studied. However, this relationship remains
less significant and asserts that basing long-term growth on its past values and on the tax
pressure remains insufficient, as the effect of taxation is difficult to quantify and the very
nature of the dependent variable requires consideration of other determinants, including
investment, savings, the tax structure and so on.

5. Conclusions
This study contributes to the literature by documenting the impact of tax pressure on
long-term economic growth in Morocco, thus providing a framework for future research
into this complex relationship. Using econometric models such as VAR and VECM, it
highlights the differential impact of past values on the real GDP growth and of tax pressures
on current growth. The confirmation of these results in relation to previous studies and
national practices underlines their contextual relevance.
The implications of this study are of interest to researchers and practitioners alike.
For researchers, it provides a basis for a deeper understanding of the mechanisms that
create the relationship between tax pressure and long-term economic growth and paves the
way for a broadening of the theory on the factors that create the relationship between tax
Economies 2024, 12, 201 17 of 18

pressure and long-term economic growth, such as investment, savings and tax structure.
For practitioners, based on the results obtained, it is suggested that an optimized tax
structure be adopted that encourages investment and innovation while regularly evaluating
public spending to ensure its contribution to economic growth, particularly in the fields
of education and infrastructure. Real implementation of the principles of the new tax
policy reform is needed to combat tax evasion and avoidance, thereby increasing revenues
without raising tax rates. It is also suggested to analyze tax progressivity to ensure a fair
distribution of the tax pressure and to emphasize transparency and accountability in tax
administration. Finally, before implementing new tax measures, it would be prudent to
carry out impact studies to assess their potential consequences for economic growth and
social equity.
It is important to recognize that the methodological choices made in this study, based
on the use of specific econometric models such as VAR and VECM, may influence the
generalization of the results to other contexts. Although the quantitative nature of the
study offers analytical rigor, it may overlook certain qualitative aspects of the relationship
between tax pressure and economic growth. As a result, it is necessary to be cautious
when extrapolating the conclusions to other situations, considering the economic, fiscal
and political specificities of each country. To overcome these limitations, a mixed approach
integrating quantitative and qualitative analyses could be beneficial. By exploring the
implications of the study design and methodology for the generalizability of the results,
and by providing examples of additional contexts, this study can contribute to a better
understanding of the underlying mechanisms and policy implications of the relationship
between fiscal pressure and economic growth.
It is essential to recognize that recent global events such as the COVID-19 pandemic
and geopolitical tensions are having a significant impact on national economies. These
events may disrupt the long-term relationship between fiscal policy and economic growth
in Morocco more than in other, similar contexts. However, this point deserves to be
developed further in future research to provide a comprehensive view of the impact of
macroeconomic and geopolitical challenges on the fiscal determinants of economic growth.
This study suggests promising avenues for future research. It invites further explo-
ration of the determinants of the relationship between tax pressure and long-term economic
growth, such as investment, savings and tax structure. In addition, the proposal of an
econometric method for determining the optimal level of tax pressure will pave the way
for further research. These recommendations provide valuable guidance for researchers
wishing to explore these aspects in greater depth and for decision-makers looking for
practical solutions to improve long-term economic growth in Morocco.

Author Contributions: Conceptualization, N.B., S.M., M.O. and A.B.; Methodology, N.B., S.M.,
M.O. and A.B.; Software, N.B., S.M. and M.O.; Validation, M.O. and A.B.; Formal analysis, N.B.,
S.M., M.O. and A.B.; Resources, N.B., S.M., M.O. and A.B.; Data curation, N.B., S.M., M.O. and
A.B.; Writing—original draft, N.B., S.M., M.O. and A.B.; Writing—review & editing, M.O. and A.B.;
Visualization, N.B., S.M., M.O. and A.B.; Supervision, M.O. and A.B. All authors have read and
agreed to the published version of the manuscript.
Funding: This research received no external funding.
Informed Consent Statement: Not applicable.
Data Availability Statement: Data is available at International Monetary Fund for tax pressure and
the real GDP growth rate (https://www.imf.org/en/Countries/MAR, accessed on 28 March 2022),
Research and Financial Forecasting Department (2008), Elbaggari (2023).
Conflicts of Interest: The authors declare no conflicts of interest.

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