Abstract:
This paper seeks to understand the impact of terrorism on taxation in Cabo Delgado Province, Mozambique; its effects on state-building and consolidation; the reasons that led the terrorist group to collect taxes illegally; and finally, the role of the solidarity of the (Muslim) elite in the face of the advance of violent terrorism. We argue that in terms of taxation, violent terrorism affected the government's ability to collect taxes and fees and provide services to the population locally, especially in places constantly devastated by terrorist attacks or under terrorist control. However, at provincial level, terrorism had no negative impact on taxation performance due to the fact that Mocimboa da Praia, the epicentre of violent terrorism, contributed only marginally to the total provincial taxes. We also find that counterterrorism measures corroded the traditional financing means of terrorists, who felt forced into illegal taxation imposed in the areas under their control, especially along the main roads, as their traditional financing basis was under attack. Finally, we postulate that terrorism helps to strengthen the solidarity of the Muslim elite that dominates economic activities. This study is both qualitative and quantitative, with an emphasis on difference-in-differences analysis. The study systematically uses the comparative method to understand the behaviour of taxation according to the dynamics of terrorism and counterterrorism.