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1. Been troubled by estimates of Taliban revenues for sometime. Current estimates way in excess of what is economically feasible given potential value added from key commodities produced/traded in Afghanistan & “the high cost of doing business” in FCAS.
2. When drawing on empirical data from value chains it is impossible to see how claimed revenues of $1-1.6 billion are calculated https://www.rferl.org/amp/exclusive-taliban-s-expanding-financial-power-could-make-it-impervious-to-pressure-secret-nato-report-warns/30842570.html https://www.bbc.co.uk/news/amp/world-46554097
3. Eg there are repeated claims from scholars, officials & the media of the Taliban earning up to $400 million p.a. from opiates https://committees.parliament.uk/writtenevidence/11251/html/
4. These estimates often based on literal translation of ushr, little primary data collection & methods that are biased by aggrandisement & offer only aggregate figures; obfuscation and no means of verification of “the art of the possible” re costs & profitability.
5. Yet 000’s of interviews with those directly involved in opium cultivation, trading processing & smuggling combined with imagery analysis shows margins are relatively low... https://www.lse.ac.uk/united-states/Assets/Documents/mansfield-april-update.pdf
6. & that profit & income are a function of volume & using trusted routes with well established contacts (even where transport costs might be higher). https://areu.org.af/wp-content/uploads/2017/08/1724E-Understanding-Control-and-Influence1.pdf/
7. With taxes varying even within provinces, typically @ fixed price/unit (seer, man, kg, jerib, etc)-never % price-but always <2% of value of cultivation, trade, processing & smuggling its hard to find more than $40 million in tax revenue from opiates. https://areu.org.af/wp-content/uploads/2019/05/1904E-The-Sun-Cannot-be-Hidden-by-Two-Fingers1-1.pdf
8. While there is also revenue from other drugs including cannabis & meth, our recent empirical work focused on Bakwa shows an output of meth worth $240 million, only yielding only $4.2 million in taxes to the Taliban https://www.emcdda.europa.eu/system/files/publications/13410/emcdda-methamphetamine-in-Afghanistan-report.pdf
9. Recent claims of the tax from minerals @ circa $400 million look almost excessive as for drugs. Our analysis of the value chain for talc shows taliban tax @ $5.5 million p.a. even at its peak when the industry was possibly exporting up to $90 million of crushed stones pa
10. The rates here-charged at $6.25 on a MT that can sell at up to $100 are high as a % of value compared to other commodities because tax collection is done in Pakistan.
11. However, closed by a dispute between local talc traders and the government, this income steam has been shut down for Taliban, govt, private actors & communities alike. With other minerals & metals mined potential taxes rise but hard to see how this would amount to $400 mill.
12. We continue a forensic analysis on other value chains-such fuel & transit-and everything suggests the tax on the movement of these goods is a major source of revenue-significantly higher than from drugs - due to the scale of goods entering Afghanistan & using its roadways.
13. As such, the much lauded “Connectivity” is already here & Afghanistan’s ancient tradition of “raiding” or taxing the caravans that crossed its borders continues - except in the 21st C there are fewer camels and many more 40+MT trucks.
14. What is notable in all these cases though-regardless of commodity is (i) if tax rates are predatory, profits become losses & value chains break. The result is no one gets paid; traders, transporters & populations that earn income & pay rents are alienated.
15. Let’s not forget it was also the “bazaaris” that backed the Taliban first time round to secure routes & reduce the amount of predation.
16. It’s worth repeating (ii) taxes are typically are set as a fixed amount on a fixed unit not a % of price/value. And those that cite taxes as such are typically not drawing on primary data from those that pay, only hearsay.
17. And (iii) talk of Taliban “control” of value chains & production is misplaced. There are traditional rules governing rights over natural resources, usurping those and taking ownership over mines, fields etc undermines local support & that of others.
18. Primary research shows Taliban typically have a “small government” attitude to commerce- no matter what commodity rarely pursuing a direct role in production &trade -but taxing & regulating it through their control of strategic locations or “chokepoints” along the value chain
