A recent collective study published by the "Arab Reform Forum" discusses social protection measures implemented by several MENA countries, primarily Morocco, followed by Lebanon and Jordan. The research highlights Morocco’s executive institution’s involvement in establishing a social protection system over recent years, examining how the country can seek alternative tax revenues to fund this extensive initiative. It underscores that the “heterogeneous structure of the national economy and the existence of an informal sector complicate progress in this area.”
The study outlines Morocco's journey, starting with legislative reforms, progressing to the implementation of social protection for both wage earners and informal workers, and culminating in the provision of grants for small school-aged children based on their family situation.
The report emphasizes that “tax reform and the application of property tax play a pivotal role in this social reform, unlike social contributions imposed on earned income; targeting property assets can create a fairer and more balanced tax base.” Additionally, it notes that “targeting higher-value properties could cover one-sixth of the annual costs of all planned social protection programs in Morocco, or a quarter of the solidarity fund for vulnerable groups.” However, the imposition of wealth tax is complicated by fears of capital flight, highlighting that “using taxation for social protection financing provides a more stable funding source.”
The research also points out that a tax-funded social protection system is typically more adaptable to economic and demographic changes compared to other funding mechanisms, particularly during economic crises. It suggests drawing inspiration from the French social protection model, which has expanded funding beyond worker contributions by utilizing property taxes as a sustainable source.
Finally, the document discusses property taxes as an effective solution to various social issues in the MENA region, particularly considering the acute funding shortages in social protection programs. However, it raises concerns about the willingness to leverage the real estate sector to absorb excess capital, especially as the agricultural sector declines.
The study titled “Property Taxes: Missed Opportunities for Comprehensive Social Protection Financing in Lebanon, Morocco, and Jordan” indicates that the solidarity aspect of social protection funding in Morocco, especially for vulnerable groups, “requires more substantial and stable financing” while emphasizing the need for diversified funding sources to enhance social equity, amidst a budget largely reliant on state financing and prior social programs.
