By 1st February, and as previously announced by the Ministry for General Affairs and Governance, the price of premium gasoline increased to 12.75 dirhams, up by 0.73 dirhams per liter, and the price of fuel oil and the No. 2 to 5742.72 dirhams per ton, with an increase of 798.3 dirhams, as a consequence of the Government ending subsidies of these two products. The government also announced that the price of diesel will also rise correlated with a gradual subsidy reduction to reach a price of 9.89 dirhams per liter in the month of October.
The government’s argument to end subsidies and to justify the repeated increases is the reform of the compensation fund to reduce the budget deficit, which has been saddled by subsidy provided to these products.
However the truth is not as such; with a simple look at the combination prices issued by the Ministry of Energy, Mines, Water and the Environment for the period from 15 to 30/01/2014, we can discover that the state draws for each liter premium petrol, 3.76 dirhams domestic consumption tax (TIC), and 1.17 dirhams value added tax (VAT), and that, for every liter diesel fuel, the state levies 2.42 dirhams (TIC) and one dirham (VAT). These taxes approximate 40% of the sales price to the consumer. By deducting the value of subsidy specified in 0.80 dirhams for premium petrol and 2.15 dirhams for diesel from taxes imposed on each substance, we find that the state gains the difference in favor of the Treasury worth 4.13 dirhams per liter premium petrol and 1.17 dirhams per liter diesel.
The L’Economiste Newspaper published on 16/09/2013, a study that revealed that the State levied in 2012 for fuel, approximately 13.1 billion dirhams TIC, and 11.4 billion dirhams VAT, which totals 24.5 billion dirhams. So how come the state claims after this that they support this sector, while it imposes on it an almost 40 % tax? And how it claims to support it while it levies from it all these taxes which annually increases with the increase in consumption and demand.
If we know that the oil products subsidies amounted in 2013 to approximately 21.1 billion dirhams, of which 0.77 per cent is dedicated to subsidize diesel and premium petrol (The report of the compensation fund for the month of January/2014, http://www.cdc.gov.ma/index.php/activite/statistiques), then we realize that the taxes levied by the state from oil products exceeds the alleged subsidy allocated to it, and the more we become sure that the government is lying to the people to pay from their pockets for the price of mischief created by the corruptors.
The State alleged that when it initially established the compensation fund, that the purpose of it is to ensure social peace by supporting the purchasing power of low-income people, but the practical results were far from what was said. It has essentially provided a golden opportunity, away from any accountability, to a group of big companies to make fictional profits as the largest consumer of the subsidized commodities. Former Minister of General Affairs, Najib Boulif, says: “More than 80% of the subsidy is going to the wrong place.” The results of this fund have been catastrophic on Morocco. It cost Morocco hundreds of billions of dirhams over the decades, and burdened the budget but, they were simply misspent and surreptitiously found their way to the pockets of the rich, and wondrously lost their way to the poor. The compensation fund, which is responsible for spending around 50 billion dirhams annually, published on 11/12/2013 a shocking report on the progress of its activities revealing the presence of large imbalances (the liquidation of some subsidy files in the absence of any proven document, weak human and technical capabilities, lack of updated information, inability to recover the dues, …) The reader of this report doesn’t require spending much effort to understand that those who established it wanted it to be just another way of looting public money and a form of economic revenue. Today, the state recognizes its old mistake and is preparing to further subsidies cuts and imposing high taxes on non-subsidized products without the intention of accounting those who pronounced the establishment of the compensation fund as well as those who exploited it and grew rich at the expense of people’s livelihoods and their labor.
The motive for revising the idea of subsidies is not the compensation fund imbalances despite of being numerous, but the treatment of budget glitches. For this, we find the government proceeds with lifting of subsidies to reduce expenses in return it keeps the taxes and raise the rates of some taxes to increase the levies. With the government progress in this “reformist” line, following the approach of the World Bank and the International Monetary Fund comes two evils (Munkar):
1. Taking money without its right as taxing the people is forbidden (Haram). It was narrated from Buraydah (ra) that the Messenger of Allah صلى الله عليه وسلم said about the Ghaamidiyyah woman who committed Zina and then repented and came to the Messenger of Allah صلى الله عليه وسلم to purify her by applying the (Had) punishment of stoning on her:
والذي نفسي بيده، لقد تابت توبةً لو تابها صاحب مَكْسٍ لَغُفِرَ له
“By Him in Whose Hand is my life she has made such repentance that even if a tax-collector to repent with the like of it, he would be forgiven”. [Sahih Muslim], and the wording is clearly stating the great sin of the tax-collector, and anyone who imposes illegal taxes. He صلى الله عليه وسلم also said:
لَا يَدْخُلُ صَاحِبُ مَكْسٍ الجَنَّةَ
“The collector of taxes will not enter heaven.” [Alhakim Almustadrick and verified by Muslim]
Had the “Islamic” government abolished (40%) of the taxes on fuel, the prices would have dropped dramatically, consumption would have increased and the economy would have recovered, let alone if it abolishes all taxes and be content with what Allah has authorized it to use of the citizens money. Allah has permitted plenty of resources for the state, so let it head towards the country’s underground wealth, looted by the powerful and foreign companies, to find the tremendous good.
2. Misplacing money and not spending it in the care of the affairs of the people. Thus billions of funds that are levied from the poor and middle class are used to bridge the budget deficit and to pay the interests of usurious loans, both of which are created by the corrupt capitalist policies and the presence of a class of mischief expropriated public money. Budget deficit is the difference between resources and expenditure, and reducing it requires first finding the encouraging atmosphere for economic activities. Then after that ensuring that every Dirham enters into state coffers the state has the right to it, and not to spend any Dirham except in its right place. In contrary, the actions by the state to lift subsidies, will not address the deficit because it is only dealing with a fraction of one part of the equation. Was the state serious in its quest to reduce the deficit, it would have been a priority for it to buckle down to retrieve the country’s looted resources back to the nation; by preventing private sectors, locals or foreigners, immediately or in the future, from owning oil, gas, phosphate, gold and silver mines and all minerals because they are public property for all Muslims, the benefits of which go to all of them without exception. After that, it should fight corruption in management expenses, reduce high wage differentials, and prevent political and economic revenues. In addition it should relive smuggled money and fight plunder of public money … Instead of saying to the mischief “let bygones be bygones”.
This is the reality of subsidy, its emergence, its current situation and its fate. Do not accept the bounties of your country to be looted and your money to be seized. And do not accept your pockets to be looted through taxes to compensate for what has been robbed and wasted.
And know that the solution will not be in following the recommendations of the International Monetary Fund and the World Bank guidelines nor the market economic policies dictated by these entities, which primarily provide for price liberalization and dissemination of the privatization policy. But the solution is in holding firmly to the rope of Allah and the establishment of the state of right and justice, the second Khilafah on the method of Prophethood, which rules people by the laws of Allah, guarantees for them the basic needs, and helps them to satisfy their needs of luxury. The Prophet صلى الله عليه وسلم said:
كلكم راع وكلكم مسئول عن رعيته، فالإمام راع ومسئول عن رعيته
“Every one of you is a shepherd and is responsible for his flock. The leader of the people is a guardian and is responsible for his subjects…”
We invite you to this good, to put your hands in our hands in order to work together to restore our Lord’s laws to life, so we become delighted in both realms.
Media Office of Hizb ut Tahrir in Morocco
Wednesday, 5th Rabii’ II 1435 AH
No: 01/1435 AH