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Taxes, taxmen and the Taliban

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Subhash Jangala
Subhash Jangala
Indian Revenue Service. All the posts made and articles written reflect the personal opinion of the author and not that of the Government of India

On 10th of May 2021, in the neighbourhood of Dasht-e-Barchi in west Kabul, about 85 innocent school children were killed and hundreds others were grievously injured in a bomb planted in an Afghan school. Textbooks, school bags and pencil boxes strewn all around the dusty entrance to the school, the blast hasn’t been owned up by any militant group till the time of writing.

More than 3 Lakh people have been killed in the war zone since the overthrow of the Taliban regime in 20011. In addition, in 2009, the Afghan Ministry of Public Health reported that fully two-thirds of Afghans suffer from mental health problems. The impact of the war include elevated rates of disease due to lack of clean drinking water, malnutrition, and reduced access to health care. Most factors associated with premature death and environmental degradation is exacerbated by the current war2. Afghanistan remains one of the poorest countries of the world mainly on account of the Taliban insurgency. War continues till this date between the NATO assisted Afghan security forces and the Taliban.

On one side of the war are the Afghan security forces trained and assisted by international forces comprised of armed personnel from NATO countries. The size, strength and resources at the disposal of this side is staggering. One report suggests, the total cost incurred by the United States during FY 2001 – FY 2020 is USD 980 Billion3. That is close to 70 Lakh Crores. That is about the total direct tax collection of India in the last 8 years. Or compared to problems of the Americans themselves, that would be close to a decade of free healthcare for all uninsured Americans. After a Trillion Dollars and 20 years, the United States or the NATO is nowhere close to victory. The name of the ongoing NATO mission, Operation Resolute Support reveals as much.

The question however, is, who funds the other side of the war? The Afghan government is on the side of the Americans. The Taliban operate from Afghan land. So what is the Taliban’s source of revenue to fund a winning cause against the mightiest force on earth, armed with every possible military toy available to mankind?

The devil is in the detail. Even on this date, there are a significant number of provinces in Afghanistan which are controlled by the Taliban. Any income generating activity that is performed in these provinces or that happens through these provinces is a potential source of revenue for the Taliban. In 2020, a pipeline that was passing though such a province was blasted since the owner failed to pay up his dues4 and now not just the owner, even employees are paying a part of their wages as penalties. The extortion money is not just limited to businesses like mobile phone operators, mining businesses and construction companies. In the provinces that are completely off the Afghan government’s radar, motorists, teachers, farmers and even water suppliers are not spared from the coercion and theft. The rate is usually set at 10% on income and 2.5% on wealth. Most of this form of local income is used by the Taliban for funding local operations.

It is often believed that the major source of revenue for the militants is opium cultivation. Afghanistan produces close to 90% of the world’s opium which is mostly grown in provinces controlled by the Taliban. Money is collected at each stage of production. Cultivation tax wherever opium is grown, laboratory tax wherever opium is converted to heroin and smuggling tax wherever heroin is smuggled out of the country. Some estimates project Taliban’s earning on opium close to half a billion USD every year5. The US identified opium as the main source of revenue for the Taliban’s existence and bombed a significant number of labs. But the revenue doesn’t stop with the labs being cheap to build.

But how does the organisation maintain administrative control over the finances generated across millions of square kilometers under its rule? While the Taliban do not disclose their books of accounts, there should be some method to the madness. At the head of the entire operation sits the all powerful Taliban Finance Commission (TFC). All funds generated through major sources like drug trafficking and extortion money flow right up till the Commission which is headed by senior figures within the Taliban. The TFC has a robust operating structure comprising of senior Talibani members given respectful designations and ranks. The United States has attempted to place sanctions on several of the Commissioners and the Deputy Commissioners in the TFC from time to time. Functions like collection, disbursements, delivery, capital funding, logistics are all delegated region-wise to leaders who serve as nodal points between the top level leadership and the street managers. The United States Department of Treasury palces sanctions on several members of the Taliban Finance Commission preventing almost the entire global financial world from dealing with them6. During investigations, the beneficial owners of bank accounts receiving money for release of European hostages was identified as one of the top leaders of the TFC.

The TFC has patrons outside Afghanistan as well. It has been estimated that foreign funding received by the Taliban from individuals to sovereign governments may touch half a billion USD every year. Pakistan, the Gulf states including the Saudi Arabia, UAE and Qatar, Iran and Russia have been alleged on several occasions for funding the Taliban. The TFC in the recent past has also expanded its mining into copper, gold, zinc and rare earth metals which is an increasingly profitable product which is used in all kinds of electronic components from satellites to mobile phones. Extortion from both small and large mining companies is easy since there is significant demand for Afghan products across the world.

Like a true business organisations, the Taliban have also expanded into international real estate with assets in Pakistan and the gulf states. The Taliban also allegedly own the Pakistani TV Channel SAMAA. These recent additions in the Taliban’s revenue stream are indicators of an expanding role on non-conventional sources of revenue for the Taliban.

The importance of revenue to any organisation is unmissable. In the recent past, the Taliban have grown more financially independent and powerful. A 2020 report projects that the Taliban would soon not depend foreign aid or individual gifts as it has strengthened its financial network to a position of independence and sovereignty7. This is on account of young and ambitious leaders who have substantially bolstered the revenue generating capabilities of the militant organisation. By refining taxation methods and building export markets from coal to precious stones with China and UAE being the biggest Taliban customers8. From great revenue comes great bargaining power. It is now doubtful if the extremist sunni organisation will stand by its key commitments in the US-brokered 2020 peace plan.

An organisation that is at the cusp of financial resurgence is not one which is going to shy away from the limelight. The question of defeating such an organisation in its own turf does not arise as the fiscal arteries get stronger. The last 20 years have proved that the ground level networks of the Taliban are strong and rely on the support of the Afghan masses. Even if the Afghan government can bring about significant comparative advantage to the Afghan people in the regions under its administration, the Taliban are entrenched deep into the Afghan ethos. The solution is more political and less military. The solution also hinges on both sides forgoing significant amounts of control and power held earlier. There are considerable positive take-aways from the fight against ISIS in which the Taliban had played a key role. It is time the Afghan government and the Taliban treat each other as equals and an “Afghan-led, Afghan-owned” peace process is initiated at the earliest.

1 Costs of War, Afghan Civilians, Watson Institute of International and Public Affairs, Brown University, April 2021, accessed 13th May 2021

2 Ibid

3 Kimberly Amadeo, Afghanistan War: Cost, Timeline, and Economic Impact (thebalance.com), the Balance, 23rd February 2021, accessed 13th May 2021

4 Eltaf Najafizada, Millions in Taliban Taxes Show Who’s in Charge as U.S. Departs – Bloomberg, 26th April 2021, accessed 13th May 2021

5 Dawood Azami, Afghanistan: How does the Taliban make money? – BBC News, 22nd December 2018, accessed 13th May 2021

6 Press Release: Treasury Sanctions Taliban and Haqqani Network Financiers and Facilitators | U.S. Department of the Treasury, 25th January 2018, accessed 13th May 2021

7 Frud Bezhan, Exclusive: Taliban’s Expanding ‘Financial Power’ Could Make It ‘Impervious’ To Pressure, Confidential Report Warns (rferl.org), Radio Free Europe Radio Liberty, 16th September 2020, accessed 13th May 2021

8 Ibid

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Subhash Jangala
Subhash Jangala
Indian Revenue Service. All the posts made and articles written reflect the personal opinion of the author and not that of the Government of India
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