The proposals of the Moroccan Association of the Presidents of the Councils of Prefectures and Provinces at the Third National Congress on Fiscality

Publication of the AMPCPP – January 06, 2020 – Contributions

The significant demographic growth that our country is experiencing is accompanied by an increase in the needs of citizens, making it necessary to strengthen the role that the Territorial Collectivities must play in providing services to citizens and strengthening the bodies of the modern Local Government.

Thus, the issue of financing projects and the services to be rendered to citizens have become one of the main pillars of the success of the decentralization system.

While the Moroccan Constitution and the Organic Laws relating to Territorial Collectivities have distributed competencies and roles among the various actors in the field of local development, whether by redistributing competencies vertically between the Local Government and its various territorial units or horizontally among the levels of Territorial Collectivities, the question of financial resources poses many problems with regard to the management of territorial affairs.

If the attributions have been distributed equitably among the different Territorial Collectivities and within the same category of Collectivity, without distinction between them, and that the roles have been defined equally for each of these categories of Territorial Collectivities, in a precise manner and in accordance with the Organic Laws, the fact remains that the laws governing local finances, particularly those relating to own resources, still perpetuate fiscal disparities and do not ensure balance in this area, or even take into account the socio-economic potential of Territorial Collectivities within the same category.

Thus, it is difficult for all Territorial Collectivities to cover their needs in terms of expenses by relying solely on their own resources, especially in view of:

  • The concentration of wealth production in certain Regions and Territorial Collectivities, to the detriment of others;
  • Significant differences in income and tax revenues;
  • The great geographical diversity that forces some collectivities to bear higher costs in order to provide public services, as is the case in mountainous areas, where the opening up of the inhabitants requires generally high costs, as well as in desert or semi-desert areas that are widely dispersed in terms of population distribution;
  • The cost of certain public services such as solid waste management, urban travel management / urban transport, infrastructure;

By reviewing the new attributions conferred on the Councils of Prefectures and Provinces and their relation to financial resources, the following observations can be noted:

  • Inadequacy of local tax revenues to the pace of economic growth;
  • Inadequacy of the rules instituting certain taxes to the objectives of economic development;
  • Multiplicity of taxes and royalties;
  • Multiplicity of tax expenditures;
  • Low profitability of local taxes and their adequacy to the development of citizens’ needs;
  • Absence of a clear structuring of the local tax administration;
  • In the absence of sufficient resources to support the burdens associated with the new attributions, the elected assemblies may be held accountable for management results, which may cause the delay in the implementation of the development process;
  • Recording a decline in the financial resources collected, both in terms of transferred resources and own resources (from MAD 7749 million in 2015 to MAD 5439 million in 2018. This corresponds to a decrease of 30%);
  • The share of Prefectures and Provinces of the total granted to the Territorial Collectivities in terms of VAT does not exceed 27%;
  • Own resources do not represent more than 6%. These resources are insufficient and difficult to recover. Local Government allocations cover 94% of the budget of the Councils of Prefectures and Provinces.

But despite the importance of the initiatives and efforts made by the Ministry, as well as those made by the Territorial Collectivities to improve financial resources, these resources are still struggling to reach the required level.

And so that the Prefectures and Provinces may be autonomous and be able to assume the responsibilities entrusted to them, the following suggestions were made:

General and Global Suggestions:

  • Allow the Territorial Collectivities to have stable and evolutionary resources with the ability of widening the tax base, smoothing out difficulties and encouraging investment;
  • Reduce the number of royalties and strengthen their link with Local Government taxes, in order to overcome the difficulties and obstacles to the implementation of Law 47.06 on Local Taxation and Law 39.07 on the establishment of transitional provisions concerning certain taxes, duties and fees to be paid to Territorial Collectivities;
  • Implement an efficient and cost-effective fiscal policy at the economic level;
  • Adopt significant taxes likely to provide Territorial Collectivities with sustainable and regular own resources while broadening the tax base;
  • Simplify the rules for setting up taxes (scope, base, liquidation and collection rules) and simplify procedures (taxpayer obligations, penalties and disputes);
  • Reforming the tax system should in no way increase the tax burden;

Enhancement and diversification of local taxation and improvement of parafiscal resources

Suggestions for the Councils of Prefectures and Provinces:

Proposition 1

To set the percentages for the distribution of the shares of the Prefectures and Provinces in the Local Government taxes within the framework of the Organic Law No. 112. 14, as is the case for article 188 of the Law regulating the Regions, which set the share granted to the Regions by the Local Government at 5% of corporate tax, 5% of income tax and 20% of taxes on insurance contracts, in addition to other financial allocations intended to reach 10 billion dirhams in 2021, in order to ensure the stability and control of these resources.

Proposition 2

Allowing Prefectures and Provinces to benefit from 1% of corporate tax revenues and 1% of income tax revenues, in order to increase their resources.

Proposition 3

Increase the share of the Prefectures and Provinces in the value added tax, and establish clear criteria and ratios for the distribution of this share and organize it by decree, as is the case for the distribution of the Region’s share in the taxes of the Local Government.

Proposition 4

Reinstate the taxes imposed on private educational institutions and apply progressive ratios (according to the number of students enrolled) and according to cycles (the level of education: elementary, preparatory, secondary, vocational training, higher education, private university) and allocate 5% of their turnover to Prefectures and Provinces, for the following reasons:

  • Increase in the number of private schools;
  • Implementation of the principle of solidarity stipulated in the Constitution;
  • Coverage of public expenses related to school transportation in rural areas, which is provided by the Prefectures and Provinces.

Proposition 5

Allocate 95% of the proceeds of the special tax on vehicles to the Prefectures and Provinces and 5% to the Local Government budget to cover public expenses related to the completion and maintenance of rural roads.

Proposition 6

Domiciliation of taxes to the Communal Councils (base and collection), and transfer of percentages of these taxes to the Councils of Prefectures and Provinces.

Proposition 7

Create an environmental tax by applying the Polluter = Payer principle.

Proposition 8

Create a tax on airports, train stations, ports and bus stations.

Proposition 9

Allocate a share of regional royalties, such as those from tourism, quarries, wholesale markets, slaughterhouses, etc., to the Councils of Prefectures and Provinces.

This is the Association’s contribution to the enrichment of the debate on the theme of local taxes and their role in the implementation of territorial development policies.

The Association remains at the disposal of all government partners to contribute to the construction of a new local tax system.

Contribution of the Association to the implementation of the provisions of the Organic Law No. 112.14 relating to Prefectures and Provinces

Publication of the AMPCPP – January 07, 2020 – Contributions

Territorial Collectivities live today at the pace of one of the most important stages of the development of decentralization in our country, which constitutes a crucial station for the rehabilitation and activation of local institutions, while providing them with the necessary tools and material and legal means to enable them to carry out their mandates, particularly in terms of carrying out local development and setting up local projects and facilities and providing basic services to citizens.

The 2011 Constitution of the Kingdom has devoted particular attention to the Territorial Collectivities within the general territorial chessboard of the Local Government, emphasizing since the first chapter that “the territorial organization of the Kingdom is a decentralized organization based on advanced regionalization”. The Constitution also stressed that the option of decentralization is irreversible, by laying down basic principles in the light of which the distribution of competencies between the Local Government and the Territorial Collectivities, as well as the exercise of these competencies by the concerned Territorial Collectivities, will be carried out.

As part of the implementation of the provisions of the 2011 Constitution, the Organic Law on Prefectures and Provinces constitutes a qualitative leap that has raised the Prefectures and Provinces to the rank of real actors, occupying an important position alongside the Local Government, the Region and the Commune in terms of territorial development in its various dimensions.

Thus, the constitutional provisions were clear in granting the Presidents of the Councils of Prefectures and Provinces attributions to execute the decisions adopted by the elected Councils on the basis of the principle of subsidiarity, and to allow the Territorial Collectivities to exercise their attributions on the basis of the principle of free administration.

The Organic Law has introduced important novelties that concern the definition, precision and extension of the competencies of the Prefectures and Provinces, as well as the definition of the attributions of the deliberative and executive bodies, as well as the clarification of the manner in which the exercise of competencies should be carried out, within the framework of the principle of the free administration of affairs and respect for legality, local democracy, participatory democracy, solidarity between Collectivities, responsibility linked to accountability, good public service management and the establishment of new cooperation and partnership mechanisms.

It has established an integrated general framework allowing Prefectures and Provinces to exercise their competencies in accordance with the principles of the Constitution. The conditions related to the exercise of these competencies by the Council and its President have been specified, as has been the case for the mechanisms of cooperation, partnership, management of the Prefecture or the Province, as well as for the rules of administrative control, the principles of financial management and the rules of governance relating to the judicious application of the principle of free administration.

Despite its many novelties, the Organic Law on Prefectures and Provinces has brought a fluidity that reflects the consolidation of the principles of decentralization among elected officials at the level of these entities, as well as their ability to adapt to changes that affect the legislative order in which they operate, as well as their ability to overcome the difficulties and problems that may be caused by the implementation of new legal texts, with the support of the Walis and Governors as well as  the administrative services in charge of the Interior.

And on the basis of experience in public affairs management at the Prefectural and Provincial levels, in order to improve the framework of action of the latter and increase the effectiveness of its development intervention, the services of the Ministry of the Interior have launched a consultation process with the various parties concerned in order to evaluate the implementation of the Organic Law on Prefectures and Provinces, with a view to identifying the problems and legal difficulties encountered in the application of its provisions and to formulate general conclusions about the measures to be implemented to overcome these problems and to provide an adequate framework to enable Prefectures and Provinces to carry out their projects and their vision of development more effectively and efficiently.

And given the objectives of the Moroccan Association of Presidents of the Councils of Prefectures and Provinces in terms of contributing to the consolidation of decentralization, and its status as a true partner in the implementation of decentralization in our country alongside other Associations representing the Territorial Collectivities in Morocco, the services of the Ministry of the Interior, held to involve the Association in this important work by asking it to formulate its observations and proposals concerning the various legal provisions whose implementation by the prefectures and provinces has presented challenges, based in particular on the practical and daily exercise of their members of the various attributions conferred on them within the Prefectures and Provinces.

Aware of its important role in the implementation of decentralization in accordance with the Constitution of 2011, and given the significant experience acquired by the Presidents in managing the affairs of the Prefectures and Provinces, the Moroccan Association of the Presidents of the Councils of Prefectures and Provinces couldn’t hesitate today to engage in this important task, which it considers a major initiative, able to improve the legislative framework and raise the level of performance of the Territorial Communities in general, and the Prefectures and Provinces in particular.

To this end, the Moroccan Association of the Presidents of the Councils of Prefectures and Provinces organized, on June 29, 2019 in Rabat, a workshop devoted to the study of the observations and proposals of the Presidents, relating to the implementation of the Organic Law No. 112.14. On the basis of this workshop, recommendations were addressed to the Ministry of the Interior as a constructive and quality contribution to this project of major importance for our country at this stage.