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Oxfam: A wealth tax to limit inequalities in Morocco

Pleading “for a decade of hope and not of austerity in the Middle East and North Africa”, the international NGO Oxfam believes that the generalization of access to health services and social coverage will require limiting some inequalities. It proposes for this a wealth tax.

In a recent study entitled “For a decade of hope and not of austerity in the Middle East and North Africa”, Oxfam calls for the implementation of concrete actions to fight injustice and inequalities. The ONG pleads for a strengthening of public services in order to protect the most vulnerable citizens. In addition to her recommendation to direct investment in these sectors, it believes that taxing the richest can strengthen guarantees of decent work for all.

Through its study, the international NGO confirms that the global pandemic of the new coronavirus and the health containment measures decided by governments have “paralyzed economies”. Necessary to stem the spread of the virus, however, they threaten to “push millions of people into poverty”, including “women, refugees, migrant workers and those working in the informal economy”. Oxfam therefore warns that “more austerity after this crisis will mean more uprisings, more inequality and more conflict”.

“If Jordan, Lebanon, Egypt and Morocco had implemented net wealth taxes of just 2% from 2010, this would have generated a total of around $ 42 billion, more than all IMF loans to Egypt, Morocco, Jordan and Tunisia between 2012 and 2019.”

A wealth tax to generalize social coverage

According to Oxfam, this tax could have avoided the austerity observed over the years, and gave MENA countries “more flexibility on spending policies”, but also gave them more means to absorb the economic impact of the health crisis linked to the new coronavirus, by reducing debt.

Indeed, “37 individual billionaires in the region have as much wealth as the bottom half of the entire adult population,” the study said. In addition, between 2010 and 2019, “the number of high net-income individuals with assets of $ 5 million or more in Egypt, Jordan, Lebanon and Morocco increased by 24%, and their combined wealth increased by 13.27%, from 195.5 to 221.5 billion dollars”.

The same source warns of the increase in these inequalities since 2010 and with the start of the Arab Spring. As observed during previous pandemics around the world, this imbalance could become more pronounced as the current health crisis progresses, which constitutes an aggravating element. In this sense, more than “45 million people in the region could fall into poverty, causing massive losses in terms of jobs and income”.

In the same vein, the last decade has been marked by an increase in health expenditure per household in the MENA region, from 30.8% in 2011 to 38% in 2017. Oxfam emphasizes that this rate is even higher in Egypt (60%), Iraq (58%) and Morocco (54%), notably through the “underfunding of public health systems and limited social security coverage, which is linked to formal employment”.

In the case of Morocco, preventing these disparities from continuing to widen is however possible, says Oxfam, if the country decides to implement a 2% tax on wealth. This mechanism would have made it possible to raise more than 6.17 billion dollars between 2010 and 2019. According to the same source, this sum could have been mobilized in the extension of compulsory health insurance (AMO) to 7.5 million people , thus doubling the number of population covered in the country, without significantly impacting public spending.

Strengthening public policies

In the absence of measures in this direction and in an economic context still impacted by years of austerity and recession, “low tax revenues and underfunded social services have undermined national responses to the coronavirus in the region”.

Oxfam describes a continuing trend towards privatization. “Between 2014 and 2017, the share of governments in total health expenditure increased from 61.5% to 55%, while the share of the private sector increased from 37.8% to 44% during the same period”, Underlines the study.

In Morocco, a solidarity tax on net wealth set this time at 5% would have meant that the income generated in 2019 would double Morocco’s spending in its response to the pandemic.

Although central, this tax is not the only solution to the growing inequalities. The study recalls, for example, that the situation of tourism, a key sector of the moroccan economy, can not be maintained in intensive care through grants and advantageous loans only. “Getting out of the crisis will remain extremely difficult,” said Oxfam, which advocates putting in place a public policy that can absorb the consequences of the loss of thousands of jobs in the months to come.

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