The Taliban raised about $400 million last year from sources that included donations, taxing local economies and extorting money from such targets as drug dealers, cell phone operators and aid projects, according to a U.N. report on the militant Islamist group released on Tuesday.
The report to the U.N. Security Council by the sanctions monitoring team said that about $275 million of that income reached Taliban leadership and the rest was collected, spent or misappropriated at the local level.
"The team understands Taliban funding as follows: revenue raised from taxing the local economy serves primarily to support local operations and is only in a few cases channeled upwards," the report said.
"Revenue extorted from nation-wide enterprises such as narcotics producers and traffickers, construction and trucking companies, mobile telephone operators, mining companies and aid and development projects goes to the Taliban Financial Commission which answers to the Taliban leadership," it said.
Donations were another major source of funding, which also went directly to the Taliban leadership.
The estimate covers the financial year ended March 20, 2012.
The U.N. team warned against a general perception that the Taliban's main source of income was Afghanistan's opium poppy economy. Afghanistan has long been the world's leading supplier of opium, accounting for about 90 percent of global output.
It said that Afghan officials estimate that the Taliban earned about $100 million in 2011/2012 from the opium poppy industry, a small share considering the annual value of the drug crop is estimated at $3.6 billion to $4 billion.
"This suggests that the Taliban do not make great efforts to exploit this potential source of revenue," report said.
"While it provides enough to finance much of the insurgency in the main poppy growing provinces of Helmand, Kandahar and Uruzgan, the money raised from the drug trade is insufficient to meet the cost of insurgent activity elsewhere," it said.
Local taxes imposed by the Taliban include a 10 percent tax on harvest and a 2.5 percent tax on wealth, the report said. The group will also tax services such as water or electricity, even though they have no control over the supply, and in some areas they will charge small businesses a 10 percent tax.
Another lucrative source of income has been the foreign funding of aid and development projects.
"Estimates of Taliban income from contracts funded by the United States and other overseas donors range from 10 to 20 per cent of the total, usually by the Taliban