How the Taliban’s More Efficient and ‘Fairer’ Tax System Helped Them Take Control of Afghanistan

When the Taliban won dramatically control of Afghanistan in August 2021, they used bombs and guns to quickly defeat state security forces. But they also had another valuable and effective weapon at their disposal: taxes.

Long before the withdrawal of American troops, the Taliban had developed a remarkably statist system of taxing citizens on everyday consumer goods like cigarettes and perfumes. The money raised proved to be an essential part of the Taliban’s military strategy, allowing them to expand territorial control, checkpoint by checkpoint, as an essential step towards victory.

That of my team recent survey in Afghanistan found that the Taliban were arguably more effective than the previous government – ​​which benefited from international funding and expertise – at collecting taxes.

And while Taliban revenue estimates are notoriously unreliablethe group would have done in the region of US$40m (£33m) per year just to tax opium. Collecting these taxes not only funded the war effort, but also helped to undermine the government they sought to overthrow.

Many Afghans we spoke to believed that Taliban taxes were fairer than those imposed by the government, which often involved bribes and complex bureaucracy. By being relatively less expensive and less corrupt, the Taliban have exploited widespread Afghan frustration with government incompetence.

Local commanders determined the most effective way to extract revenue from a community, being careful not to push too hard to cause a backlash, while creating relationships and a quasi-social contract. All of this played an important role in the Taliban gaining national control.

The Taliban’s taxes on the transport of goods are a prime example. In the years leading up to 2021, the Taliban gradually instituted a relatively formal customs tax using a system of checkpoints on major roads.

Taxpayers received official receipts bearing the Taliban logo. Price lists, on “official” Taliban papers, have been circulating among truckers and business owners. There were even complaint procedures for those who felt they had been overtaxed.

The system appears to have been deliberately designed to be more user-friendly than the one imposed by the government. A truck driver told us that unlike the Taliban, he had to “pay a bribe to pay taxes to the Afghan government”.

All of this helped the Taliban gain legitimacy with powerful merchants and transport companies, which then played a key role in the eventual takeover.

For when Afghanistan’s main border crossings and several provincial capitals fell in July 2021, many wondered why they fell so quickly and with relatively little violence. It quickly became apparent that local business owners, seeing in which direction the war was going, were motivated to encourage a orderly delivery.

Thus, as the Taliban took more and more territory, their income increased and could be immediately reinjected into the war effort. The capture of the border crossings filled the coffers of the Taliban as they marched on Kabul.

death and taxes

A year later, however, the Taliban will realize that it is much easier to tax as an insurgency than to raise revenue as a government. Before August 2021, about 80% of the Afghan national budget was made up of international aid. That money has now been largely cut off and the country’s reserves frozen.

Even so, the American Institute for Peace estimates that the Taliban-led government collected some $400 million in revenue during the last quarter of 2021. Although less than half of what government revenue had been during the same period in previous years , they are nevertheless substantial.

The Taliban guard the distribution of food aid donated by the Chinese government in Kabul, August 2022.
EPA-EFE

Yet the Taliban – so long as they remain unrecognized and isolated – are unlikely to be able to generate enough revenue to stave off economic collapse.

In the midst of a humanitarian crisis that has triggered warnings that 95% of Afghans don’t have enough to eat, few have the money to pay taxes. Aid agencies fear paying taxes to the Taliban, lest they be found violating anti-terrorism policies and sanctions. The situation is increasingly serious.

But what happened in Afghanistan offers lessons about how wars are understood elsewhere. Insurgent taxation is an overlooked but essential part of war economies around the world, from the Houthis in Yemen to Al Shabaab in Somalia.

A better understanding of how the Taliban was able to collect so much money and set up efficient financial systems could have provided signals about how – and how quickly – the territory would change hands. The international community needs to rethink its outdated responses to such tactics, instead of relying on military strikes and sanctions, which have done little to stop the Taliban.

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