Tax revenue and public services under pirates and terrorists

The author believes he is doing something new... Anyway, it is a good summary of how ISIS financed the caliphate machinery.

The ISIS Files. By Rukmini Callimachi Photographs by Ivor Prickett
The New York Times, April 4, 2018
https://www.nytimes.com/interactive/2018/04/04/world/middleeast/isis-documents-mosul-iraq.html


1  revenue

The documents describe how it made money at every step in the supply chain: Before a single seed of grain, for example, was sown, the group collected rent for the fields it had confiscated. Then, when the crops were ready to be threshed, it collected a harvest tax.

It did not stop there.

The trucks that transported the grain paid highway tolls. The grain was stored in silos, which the militants controlled, and they made money when the grain was sold to mills, which they also controlled. The mills ground the grain into flour, which the group sold to traders.

Then the bags of flour were loaded onto trucks, which traversed the caliphate, paying more tolls. It was sold to supermarkets and shops, which were also taxed. So were the consumers who bought the finished product.

In a single 24-hour period in 2015, one of the spreadsheets in the briefcase shows, the Islamic State collected $1.9 million from the sale of barley and wheat.

Another table shows that the militants earned over $3 million in three months from gross flour sales in just three locations in Mosul.

The organization appeared intent on making money off every last grain — even crops that were damaged.

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On just one day, according to another statement, it took in over $14,000 from wheat described as having been scorched in a bombing, and $2,300 from the sale of spoiled lentils and chickpeas. It also took in over $23,000 from grain that had been scraped off the bottom of a tank, according to one spreadsheet. <<<<<<<<<<<<<<<<<

The Islamic State’s tax arm reached into every facet of life in Mosul. Households in Iraq were taxed 2,000 dinars per month (less than $2) for garbage collection, 10,000 dinars (about $8) for each 10 amperes of electricity, and another 10,000 for municipal water.

Businesses wishing to install a landline paid a 15,000-dinar (about $12) installation fee to the group’s telecommunications office, followed by a 5,000-dinar monthly maintenance fee.

Municipal offices charged for marriage licenses and birth certificates.

But perhaps the most lucrative tax was [the] zakat ... It is calculated at 2.5 percent of an individual’s assets, and up to 10 percent for agricultural production, according to Ms. Revkin, the Yale researcher. While some of these fees had been charged by the Iraqi and Syrian governments, the mandatory asset tax was a new development.

Ordinarily in Islamic practice, the zakat is a tithe used to help the poor. In the Islamic State’s interpretation, an act of charity became a mandatory payment, and while some of the funds collected were used to help needy families, the Ministry of Zakat and Charities acted more like a version of the Internal Revenue Service.

Most accounts of how the Islamic State became the richest terrorist group in the world focus on its black-market oil sales, which at one point brought in as much as $2 million per week, according to some estimates. Yet records recovered in Syria by Mr. Tamimi and analyzed by Ms. Revkin show that the ratio of money earned from taxes versus oil stood at 6:1.

Despite hundreds of airstrikes that left the caliphate pocked with craters, the group’s economy continued to function, fed by streams of revenue that could not be bombed under international norms: the civilians under their rule, their commercial activity and the dirt under their feet.

According to estimates from the Food and Agriculture Organization of the United Nations, the land that the militants seized was Iraq’s most fertile, and at the group’s height, the fields that were harvested accounted for 40 percent of the country’s annual wheat production and more than half of its barley crop. In Syria, the group at one point controlled as much as 80 percent of the country’s cotton crop, according to a study by the Paris-based Center for the Analysis of Terrorism.

It all added up to astonishing sums, as much as $800 million in annual tax revenue, according to the study.

...

Tax collection continued until the very end. At least 100 documents
labeled “Daily Gross Revenue” that showed incoming cash were dated November 2016, a month after the start of the coalition’s push to take back the city.

Even as tanks were rolling in and taking surrounding neighborhoods, the trade division continued to make money, pocketing $70,000 in a single sale.



2  public services

But on the same thoroughfares, Mr. Hamoud noticed something that filled him with shame: The streets were visibly cleaner than they had been when the Iraqi government was in charge.

Omar Bilal Younes, a 42-year-old truck driver whose occupation allowed him to crisscross the caliphate, noticed the same improvement. “Garbage collection was No. 1 under ISIS,” he said, flashing a thumbs-up sign.

The street sweepers hadn’t changed. What had was that the militants imposed a discipline that had been lacking, said a half-dozen sanitation employees who worked under ISIS and who were interviewed in three towns after the group was forced out.

“The only thing I could do during the time of government rule is to give a worker a one-day suspension without pay,” said Salim Ali Sultan, who oversaw garbage collection both for the Iraqi government and later for the Islamic State in the northern Iraqi town of Tel Kaif. “Under ISIS, they could be imprisoned.”