IDEAS home Printed from https://ideas.repec.org/p/cir/cirwor/2023s-22.html
   My bibliography  Save this paper

Is the Moroccan Fiscal System Progressive ? A Shapley Decomposition

Author

Listed:
  • Touhami Abdelkhalek
  • Dorothée Boccanfuso

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, leads sometimes 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 from Morocco, we first highlight the ifluence of taxes and subsidies on household incomes. We then derive the income variations relating to the tax burden and gains from subsidies for the different population groups. We then 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 to poverty and inequality measures. This analysis is done separately for rural and urban areas, useful to formulate recommendations on this basis. Our results show that the tax and subsidy system, taken all together, is redistributive. We can also conclude unambiguously that this system reduces poverty and inequality. However, the value-added tax (VAT) is regressive in its current form, unlike income tax, which is progressive. Finally, subsidies for primary and secondary education are highly progressive, while those for higher education are regressive,benefiting the wealthiest quintiles. Les politiques publiques, notamment celles liées à la politique fiscale et aux subventions, devraient normalement contribuer à réduire la pauvreté et les inégalités. Cependant, la combinaison des différentes composantes dans leur mise en œuvre, conduit parfois à une augmentation de la pauvreté et/ou des inégalités sans que cela soit nécessairement visible. Dans cet article et sur la base des données de la vague 2019 de l'Enquête Panel des Ménages de l'ONDH au Maroc, nous mettons d'abord en évidence l'influence des impôts et des subventions sur les revenus des ménages. Nous dérivons ensuite les variations de revenus relatives à la charge fiscale et aux bénéfices des subventions pour différents groupes de population. Nous caractérisons ensuite les impôts et les subventions en termes de progressivité et de régressivité. Enfin, à l'aide d'une décomposition de Shapley, nous déterminons la contribution de chaque impôt et subvention aux mesures de la pauvreté et de l'inégalité. Cette analyse est effectuée en distinguant les zones rurales et urbaines afin de formuler de meilleures recommandations. Nos résultats montrent que le système d'impôts et de subventions, pris dans son ensemble, est redistributif. Nous concluons également sans ambiguïté que le système fiscal réduit la pauvreté et les inégalités. Cependant, la taxe sur la valeur ajoutée est régressive dans sa forme actuelle, contrairement à l'impôt sur le revenu qui est progressif. Enfin, les subventions à l'enseignement primaire et secondaire sont fortement progressives, alors que celles à l'enseignement supérieur sont régressives et profitent aux quintiles les plus riches.

Suggested Citation

  • Touhami Abdelkhalek & Dorothée Boccanfuso, 2023. "Is the Moroccan Fiscal System Progressive ? A Shapley Decomposition," CIRANO Working Papers 2023s-22, CIRANO.
  • Handle: RePEc:cir:cirwor:2023s-22
    as

    Download full text from publisher

    File URL: https://cirano.qc.ca/files/publications/2023s-22.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Francis Menjo Baye, 2006. "Growth, Redistribution and Poverty Changes in Cameroon: A Shapley Decomposition Analysis," Journal of African Economies, Centre for the Study of African Economies, vol. 15(4), pages 543-570, December.
    2. Mercedes Sastre & Alain Trannoy, 2002. "Shapley inequality decomposition by factor components: Some methodological issues," Journal of Economics, Springer, vol. 9(1), pages 51-89, December.
    3. Touhami Abdelkhalek & Dorothée Boccanfuso, 2021. "Impact of Tax Reforms in Applied Models: Which Functional Forms Should Be Chosen for the Demand System? Theory and Application for Morocco," CIRANO Working Papers 2021s-07, CIRANO.
    4. Azevedo, Joao Pedro & Sanfelice, Viviane & Nguyen, Minh C., 2012. "Shapley Decomposition by Components of a Welfare Aggregate," MPRA Paper 85584, University Library of Munich, Germany.
    5. Anthony Shorrocks, 2013. "Decomposition procedures for distributional analysis: a unified framework based on the Shapley value," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 11(1), pages 99-126, March.
    6. Pernia, Ernesto & Kakwani, Nanak, 2000. "What is Pro-poor Growth?," MPRA Paper 104987, University Library of Munich, Germany.
    7. Nizar Jouini & Nora Lustig & Ahmed Moummi & Abebe Shimeles, 2018. "Fiscal Policy, Income Redistribution, and Poverty Reduction: Evidence from Tunisia," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(s1), pages 225-248, October.
    8. Jonathan Haughton & Shahidur R. Khandker, 2009. "Handbook on Poverty and Inequality," World Bank Publications - Books, The World Bank Group, number 11985, December.
    9. Ravallion, Martin & Chen, Shaohua, 2003. "Measuring pro-poor growth," Economics Letters, Elsevier, vol. 78(1), pages 93-99, January.
    10. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, vol. 87(345), pages 71-80, March.
    11. Nanak Kakwani & Ernesto M. Pernia, 2000. "What is Pro-poor Growth?," Asian Development Review (ADR), World Scientific Publishing Co. Pte. Ltd., vol. 18(01), pages 1-16.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Robles, Adrian & Robles, Marcos, 2016. "Changes in Welfare with a Heterogeneous Workforce: The Case of Peru," IDB Publications (Working Papers) 7507, Inter-American Development Bank.
    2. Sugata Marjit & Anjan Mukherji & Sandip Sarkar, 2018. "Pareto Efficiency, Inequality and Distribution Neutral Fiscal Policy - An Overview," Discussion Papers Series 590, School of Economics, University of Queensland, Australia.
    3. B. Essama‐Nssah & Peter J. Lambert, 2009. "Measuring Pro‐Poorness: A Unifying Approach With New Results," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 752-778, September.
    4. Francisco Azpitarte, 2014. "Was Pro-Poor Economic Growth in Australia for the Income-Poor? And for the Multidimensionally-Poor?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 117(3), pages 871-905, July.
    5. Kraay, Aart, 2004. "When is growth pro-poor? Cross-country evidence," Policy Research Working Paper Series 3225, The World Bank.
    6. David Woodward & Andrew Simms, 2006. "Growth is Failing the Poor: The Unbalanced Distribution of the Benefits and Costs of Global Economic Growth," Working Papers 20, United Nations, Department of Economics and Social Affairs.
    7. Florent Bresson & Jean-Yves Duclos & Flaviana Palmisano, 2019. "Intertemporal pro-poorness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 52(1), pages 65-96, January.
    8. Carlos Gradín, 2021. "Inequality by Population Groups and Income Sources: Accounting for Inequality Changes in Spain During the Recession," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(2), pages 481-508, June.
    9. Bernardo Candia & Eduardo Engel, 2018. "Taxes, Transfers and Income Distribution in Chile: Incorporating Undistributed Profits," Commitment to Equity (CEQ) Working Paper Series 82, Tulane University, Department of Economics.
    10. Deutsch, Joseph & Silber, Jacques, 2011. "On various ways of measuring pro-poor growth," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 5, pages 1-57.
    11. Priyabrata Sahoo & Debolina Biswas & Saswata Guha Thakurata, 2023. "Is Growth Pro-poor Among the States of India? A Poverty Decomposition Exercise During the 2000s," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 165(1), pages 107-133, January.
    12. Rolf Maier, 2005. "Exchange Rate Regimes and Pro-Poor Growth," International Finance 0504008, University Library of Munich, Germany.
    13. Rolf Maier, 2005. "External Debt and Pro-Poor Growth," Macroeconomics 0504031, University Library of Munich, Germany.
    14. Lustig, Nora & Martinez Pabon, Valentina & Pessino, Carola, 2023. "Fiscal policy, income redistribution, and poverty reduction in Latin America," LSE Research Online Documents on Economics 120683, London School of Economics and Political Science, LSE Library.
    15. Mwangi S. Kimenyi, 2006. "Economic Reforms and Pro-Poor Growth: Lessons for Africa and other Developing Regions and Economies in Transition," Working papers 2006-02, University of Connecticut, Department of Economics.
    16. Rolf Maier, 2005. "Trade Policy and Pro-Poor Growth," International Trade 0504007, University Library of Munich, Germany.
    17. Kraay, Aart, 2006. "When is growth pro-poor? Evidence from a panel of countries," Journal of Development Economics, Elsevier, vol. 80(1), pages 198-227, June.
    18. Carlos Gradín, 2020. "Quantifying the contribution of a subpopulation to inequality an application to Mozambique," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(3), pages 391-419, September.
    19. Chandan, Roy, 2016. "Inclusive trade in Indian silk industry during post globalized era," MPRA Paper 102322, University Library of Munich, Germany, revised Jan 2017.
    20. Carlos Gradín, 2018. "Quantifying the contribution of a subpopulation to inequality: An application to Mozambique," WIDER Working Paper Series 60, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Fiscal system; Poverty; Inequality; Shapley decomposition; Morocco; Fiscalité; Pauvreté; Inégalités; Décomposition de Shapley; Maroc;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cir:cirwor:2023s-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Webmaster (email available below). General contact details of provider: https://edirc.repec.org/data/ciranca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.