Analysis of the Economics of Tobacco in Morocco

This study of the tobacco industry and
taxation policy in Morocco summarizes tobacco expenditure
data from surveys, and looks at trends in these
expenditures. The taxation and price policy implemented by
the Moroccan government through the R?gie des Tabacs is
described, and the overall contribution of the industry to
tax revenues is estimated. The report briefly describes how
the industry is organized, including farming activities,
processing, marketing and the distribution network.
Effective rates of taxation by categories of brands are
estimated. The study then analyses the impact of price and
taxation policy on tobacco demand and tax revenues. Data and
estimation model specifications are described, and the
results presented of different simulations of tax/price
increases on tobacco consumption and tax revenues. The
analysis shows that modest increases in tobacco tax rates in
Morocco would generate additional revenues, and reduce
consumption of tobacco products. Since few jobs are
generated by the tobacco industry in Morocco, and 70 percent
of all raw tobacco is imported, a fall in cigarette
consumption would not be likely to cause any significant
loss of employment. Moreover, as consumers switch their
expenditures to other goods and services instead of
cigarettes, the additional demand in other sectors of the
economy will generate new jobs and incomes. The report
concludes with recommendations for further research.