Optimal Taxation, Fiscal Effort, and Economic Growth: An Empirical Analysis for the Case of Morocco

Abstract

Tax revenue remains the primary source of funding for every economic activity, every sustainable development policy, and every structural strategy for social cohesion, particularly in developing countries. Indeed, the establishment of an optimal, credible, and equitable tax system is considered efficient for countries primarily aiming for the well-being of citizens, fiscal advantages to attract investors, and sustainable financing of economic activity as a whole. This paper examines the issue of optimal tax pressure in Morocco, using two main econometric models: the basic Scully model and an augmented model that includes an explanatory variable for the budget deficit. The analysis, conducted on data covering the period 2000-2023, reveals that the optimal tax pressure for Morocco ranges between 18.41% and 23.05%, depending on the two models applied. These findings provide policymakers with guidance to design more effective tax policies, reducing the tax burden while ensuring sufficient budgetary resources to cover public expenditures.

Keywords: optimal pressure, Scully model, budget deficit, tax policies, public spending, tax burdens.

JEL Classification: B16, B12, B23, B41, C01, C15, C52, F15.

Paper type: Empirical research