ISIS’ Extortion and ‘Taxation’ Are Lucrative and Hard to Suppress

A great deal has been written about the oil resources that are supposedly ISIS' principal source of revenue, although some reports suggest that estimates of $1.5 million in daily oil income may be wildly exaggerated.

But what has often been ignored is ISIS’ less conspicuous and potentially superior capacity to raise funds through a complex and tightly controlled system of "taxes" within its claimed "Caliphate."

By way of such taxation -- or more correctly, extortion -- ISIS may be earning as much as $600 million annually by levying a 50 percent tax on government-paid employees, a 3 to 5 percent tax on all local businesses and a tax of between 10 and 15 percent on all commercial trucks passing through its territory, according to conversations I've had with people living in ISIS territory or who have family there. The combined income and total value of household assets are also used to calculate a regular rate of tax paid to ISIS weekly, on Fridays. This vast income is then supplemented by way of an intricately enforced network of extortion operations in areas under ISIS influence.

Since the U.S.-led occupation of Iraq, ISIS and its predecessors have consciously chosen to develop and maintain reliable and durable sources of internal finance in order not to rely existentially on external donations from financiers abroad, as Al Qaeda has traditionally done. By retaining such financial independence, ISIS has established for itself an invaluable insurance blanket against traditional counterterrorism finance measures, making it that much harder to undermine its financial clout.

While countering ISIS sale of oil poses some challenges, especially with regards to the prominent role of civilians in extraction and distribution, it nonetheless represents a discernible target. Tackling ISIS’ extortion, however, can only genuinely be done through a wholesale recapture of ISIS territory, for which no existing Syrian, Iraqi or international strategy appears to show any particular sign of promise.

To most practically achieve such an objective, the U.S.-led anti-ISIS coalition must urgently acknowledge and act upon the already well-demonstrated capacity of Syria’s conventional opposition to defeat ISIS on the battlefield. It appears to have been all but forgotten that these forces vanquished ISIS in four-and-a-half Syrian provinces in six weeks in early 2014. Our favored allies, the Kurds, have recaptured no more than half a province in one year.

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