Tax Revenue Mobilisation in Conflict-affected Developing Countries

Taxation is central to state building in post-conflict states. This reflects both the urgent need for revenue during post-conflict reconstruction and the broader governance implications of taxation related to state capacity building and the expansion of governmental responsiveness and accountability. In European states, taxation was historically central to enabling war and a longstanding literature suggests that conflict, or its threat, may increase tax collection.

However, this centrality is not reflected in existing practice or research. It is unclear whether theoretical findings about the relationship between conflict and taxation hold in contemporary developing countries, given the prevalence of intrastate conflict, weak national identities, weak states and access to external sources of funding. It is likely that conflict will actually reduce revenue mobilisation due to its negative effects on economic activity, the tax base, tax collection and public administration.

These anticipated findings have not been tested empirically using reliable data that isolates aid and resource revenues and disaggregates tax revenue type. Accordingly, this paper addresses an old question – How does conflict affect revenue mobilisation? – with newly available, high-quality data on government revenues.

Using the UNU-WIDER Government Revenue Database, we explore longitudinal trends of tax revenue mobilisation prior to, during and after conflict in selected countries that have experienced conflict since 1980. This medium-N trend analysis explores the relationship between tax revenue performance and conflict characteristics. It provides a contemporary counterpoint to theories of the role of taxation in war making and state building.

Summary of article published in the Journal of International Development.