The Determinants and Dimensions of Armed Group Taxation

Why do some armed groups tax while others do not? When they do tax, how do they develop their taxation systems, and what determines whether taxation is enforced coercively or more contractually? This dissertation investigates the prevalence, institutionalization, and nature of armed group taxation (AGT) to understand its implications for governance, legitimacy, and conflict outcomes. While taxation has long been viewed as a defining function of the state, armed groups frequently engage in taxation as part of their broader governance practices, particularly in contexts where the state is fragile, contested, or absent. Taxation is the most common governance practice of armed groups, yet it remains underexplored as a distinct wartime institution despite its potentially transformative effects. This dissertation argues that AGT varies along three key dimensions: its prevalence, its degree of institutionalization, and the extent to which it is enforced coercively or contractually. The argument is structured around three interrelated questions: (1) When do armed groups tax? (2) When do they institutionalize taxation? and (3) When do they tax in more contractual ways? Drawing on a global quantitative analysis and a comparative case study of the Moro Islamic Liberation Front (MILF) and the Communist Party of the Philippines-New People’s Army (CPP-NPA), this research demonstrates that AGT is shaped by three primary factors: revenue imperatives, feasibility (military and organizational capacity), and community embeddedness. The findings show that while financial pressures drive armed groups to tax, their ability to do so is constrained by military strength and organizational capacity, which are necessary for enforcing compliance. When groups lack these capabilities, taxation remains infeasible, regardless of financial need. However, even among groups that successfully institutionalize taxation, the mere existence of tax systems does not automatically lead to more contractual or reciprocal relationships with taxpayers. Instead, community embeddedness and the conditional role of non-tax revenues shape the nature of taxation. Embedded groups with access to alternative revenue sources are more likely to allocate resources toward public goods and services, reinforcing taxation as a governance tool rather than mere extraction. In contrast, groups that lack embeddedness and face acute financial desperation—particularly those without non-tax revenues—are more likely to apply more coercive taxation to wealthier taxpayers, such as foreign businesses or political actors, while engaging minimally with the broader populations. As a result, taxation by non-embedded groups is more likely to be perceived as coercive, whereas embedded groups with financial stability are better positioned to cultivate reciprocal fiscal relationships with taxpayers, towards a more contractual approach to taxation. This dissertation makes three key contributions. First, it develops a framework for conceptualizing AGT as a distinct phenomenon, challenging the common conflation of taxation with extortion or looting. Second, it provides empirical evidence on the prevalence and institutionalization of armed group taxation, showing how taxation systems evolve over time in response to revenue pressures and feasibility. Finally, it examines the role of AGT in shaping wartime political orders, highlighting its potential to foster governance legitimacy or deepen coercion, with implications for state-building and post-conflict transitions. By treating taxation as a central component of rebel governance, this research advances our understanding of how armed groups interact with local populations and the conditions under which they develop state-like institutions.

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