Morocco - Politics, government, and taxation

After independence from France in 1956, a hereditary monarchy was established, which is now headed by King Mohammed VI, who succeeded his father and ruler of 38 years, King Hassan II, in July 1999. The country has had a multiparty system and an elected legislature since the 1970s. Morocco has more than a dozen legal political parties. The Constitutional Union (UC) Party and the National Rally of Independents (RNI) are the 2 largest. Both are conservative and pro-monarchy and together traditionally provide a near majority in parliament to back the government. Although the king tolerates the opposition, he is quick to suppress groups on the political fringe. Even members of legal political groups, such as the small, leftist Party of Progress and Socialism (PPS), have been targeted periodically for crackdowns by security forces.

Ultimate power rests with the king, who is chief of state and appoints the prime minister, all cabinet ministers, and all supreme-court judges. A new constitution, designed by the late King Hassan II in 1996 and approved by a public referendum that same year, established a bicameral parliament, replacing the previous system in which two-thirds of a 333-member unicameral parliament (Majlis Anouwab) were elected by popular vote. Under the new constitution, all members of parliament are now elected.

A program to reform the economy was launched in 1992 with the help of the World Bank. The objective was to privatize state-owned companies, enhance the country's economic management, raise productivity, and reduce its soaring budget deficit . The program gained new momentum under the government of Abderrahmane Youssoufi, who has served as prime minister since 1998. The current government, a coalition of socialist , left-of-center, and nationalist parties and, for the first time in years, opposition parties, has launched a campaign to reform business laws and regulations and draft a new labor law. The judicial system and intellectual property rights legislation have already been revamped. Overall, however, the pace of Morocco's privatization program has been rather slow; only 60 out of 114 state companies identified for privatization in 1993 had been privatized by 2001. Plans are underway to sell off the government's shares in Maroc Telecom and Banque Centrale Populaire, the largest bank, primarily to a group of foreign investors.

Taxes and custom duties are a major source of government revenue, accounting for 42 percent of income. Customs duties account for 14 percent of revenue, while direct taxation accounts for the remaining 28 percent. Morocco's tax system, reformed in 1984, consists of a wide variety of taxes including the 20 percent value-added tax (VAT), which was instituted in December 1985, a 35 percent corporate tax, general income tax and return-on-shares tax, effective since December 1986.

One of the major items on Morocco's international agenda is its claim to the Western Sahara. The region is a vast stretch of inhospitable land containing large phosphate reserves. Ever since former colonial power Spain abandoned the region in 1975, it has been the site of an insurgency led by the pro-independence Popular Front for the Liberation of Saquia Al Hamra and Rio De Oro (Polisario). A United Nations vote on the future of the territory, originally scheduled for January 1992, has been repeatedly deferred due to unresolved arguments over voter eligibility and registration.