Government defends VAT inclusion in 2024 finance bill amidst public backlash

Government defends VAT inclusion in 2024 finance bill amidst public backlash

In the wake of widespread public outcry and substantial governmental criticism triggered by the inclusion of value-added tax (VAT) in the 2024 draft finance law, the government earlier this week sought to defend its stance in the face of scrutiny from Members of Parliament.

They argue that the proposed measures concerning water and electricity tariffs will not adversely affect citizens’ purchasing power.

Faouzi Lakjaa, the Minister Delegate in charge of the Budget, addressed the issue during an evening session before the House of Representatives Finance Committee, responding to the preliminary discussion of the project.

“We did not introduce the value-added tax to undermine the purchasing power of the less fortunate.”

Lakjaa went on to explain to the assembly, “When we discuss electricity costs, an annual 2 percent increase will translate to a mere 2 dirhams per month in 2024.” He emphasized that 66 percent of consumers whose bills do not exceed the initial threshold will only bear a 1 dirham increase in 2024.

Furthermore, the minister noted that “the second category, comprising 17 percent of consumers, will see their bills rise by 2.3 dirhams.” He highlighted, “The remaining 17 percent of electricity consumers belong to the high consumption category, which creates a deficit for the National Office.” The state subsidizes 7 billion dirhams for water and electricity in this context.

In regards to the VAT applied to water, Lakjaa revealed, “For 59 percent of Moroccans, the increase in their bills will be a mere 16 cents, while 28 percent will experience an increase of 60 cents.” He added with a hint of sarcasm, “If you believe that 16 cents will impact citizens’ purchasing power, we are willing to reconsider.” He urged the representatives to communicate the truth to the citizens.

“Thirteen percent of consumers consume between 20 and 35 cubic meters per month, which is 26 times more than the average consumption rate of Moroccans, resulting in an annual deficit of 7 billion dirhams,” the minister said.


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