X

Tax Reform - The Court of Auditors Warns of Budgetary Impact on Households

Tax Reform - The Court of Auditors Warns of Budgetary Impact on Households
Thursday 21 December 2023 - 14:05
Zoom

The Court of Auditors is sounding the alarm. In its annual report released on December 19, the institution warns of the potential effects of tax reform on household budgets. Initiated by Law 69-19, this overhaul aimed to establish a fairer tax system while generating resources to fund public policies. A commendable goal, indeed, but one that could come at the expense of the taxpayer.

The first stumbling block: the convergence of corporate tax. Reduced from 31% to 20% for SMEs and ETIs, its rate will increase to 35% for large groups by 2026, in accordance with the 2023 Finance Law. While streamlining the corporate tax landscape, this change must be closely monitored, according to the Court, which calls for an assessment of its inflationary impact.

The same concerns arise regarding income tax. On the agenda: a new regime for lawyers, adjustment of the withholding tax scale, and a return to the taxation of global income. These innovations, combined with the revision of property taxes, could weigh on the budgets of individuals.

On the VAT front, the stated objective is the "neutrality" of the tax through the generalization of the normal rate at 20%. The problem: some everyday consumer goods could fall into this category, affecting purchasing power. Hence the Court's call to assess the repercussions of such changes before their implementation.

Because other modifications are in the pipeline, such as the extended exemption of essential products or the convergence towards only two rates (10% and 20%) as outlined in the 2024 Finance Law. Positive shifts indeed, but they should be counterbalanced by an ambitious social policy. Take heed!


Read more