Taxing times: How inflation and heavy taxation are squeezing Morocco

Morocco’s economic strategy has long been admired as a model for North Africa, with the kingdom positioning itself as a key player in industries ranging from aerospace to tourism. Yet, despite sustained growth, the country’s businesses and consumers are facing mounting pressures from high taxation and persistent inflation. These forces erode purchasing power, threatening economic development.

February’s general strike, where businesses and workers protested the current fiscal regime, underscores the crisis. Inflation—fueled by global supply chain disruptions, rising energy prices, and a weakening dirham—continues to strain households. Coupled with an aggressive tax structure that includes high value-added tax (VAT) rates, corporate levies, and social security contributions, the economic outlook grows more precarious. 

For consumers, inflation has made essential goods less affordable, with food and fuel prices climbing steadily. The 20% Value Added Tax further strains household budgets. In a country with widespread informal employment, rising costs disproportionately impact the most vulnerable, exacerbating income inequality and stoking unrest.

Businesses fare no better. Manufacturers are contending with higher production costs and tax burdens that make exports less competitive. The aerospace sector, a key pillar of Morocco’s industrial strategy, is struggling with rising costs that undermine its competitiveness. Airbus and Boeing suppliers, once lured by the kingdom’s low-cost environment, now face shrinking margins from increased taxation and inflationary pressures on wages and materials. Without fiscal relief, Morocco risks losing investment to business-friendly rivals like Turkey and China. 

The same challenges apply to agriculture, the bedrock of Morocco’s rural economy. Higher prices for fuel, fertilizers and other inputs—together with a long-running drought—are squeezing farmers and threatening food security. 

Tourism, however, thrives, buoyed by record visitor numbers and rising revenues. While broader economic pressures impact local discretionary spending and national tourists, foreign tourists continue to drive growth, making tourism one of the best performers in the economy.

Morocco’s government has introduced targeted subsidies on fuel and food to mitigate the crisis. Without deeper fiscal reforms however, these measures remain temporary fixes. A strategic solution requires tax cuts for businesses, VAT reductions on essential goods, and targeted support for small and medium-sized enterprises (SMEs) that form the backbone of the economy.

If Morocco hopes to sustain its economic momentum, it must strike a balance between fiscal discipline and economic stimulation. Overburdening businesses and consumers with high taxes amid rising inflation risks stifling growth and deterring investment. To remain a dynamic, emerging market, Morocco’s tax policies must foster growth, not hinder it.

*Lonzo Cook is a journalist and writer. He spent two decades at CNN in a series of senior editorial and management roles including leading breaking news operations across Asia, the Middle East and Latin America. He currently works as a senior communications strategist, partnering with corporations and executives to develop integrated communication strategies to connect with audiences in our fast paced, ever changing engagement landscape.