THE Taliban raised $US400 million last year through taxes, donations, and extorting businessmen and narcotics dealers in Afghanistan, according to a new UN report.

The Islamist group has also taken hundreds of millions of dollars from the billions pumped into Afghanistan for development projects, according to the report released this week by UN sanctions experts to the Security Council.

The experts estimated that Taliban raised $US400 million in the 12 months up to March. About $US275 million went to the Taliban leadership while $US125 million was spent or misappropriated at the local level.

“Revenue extorted from nationwide 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,” said the report.

The experts said donations are a “major” source of funding which also go to militia leaders.

The report quoted estimates by the NATO-led International Security Assistance Force (ISAF) that militia attacks cost between $US100 million and $US155 million a year to stage while the rest goes to maintaining the insurgency.

“Since 2006 the Taliban have managed to finance an ever-increasing number of attacks, reflecting a year-on-year increase in income.”

The Taliban uses traditional taxes: a 10 per cent tax on harvest and a 2.5 percent tax on wealth.

The harvest tax, much of it from poppy cultivation, is the “main source” of income, the report said. But the Taliban also taxes water and electricity supplies and other services.

“In some areas they collect a 10 per cent tax from local shopkeepers and other small businesses,” said the report, which added that the militia acts much like a local administration.

According to UN figures, the Taliban raised about $US155 million in 2009 from the poppy trade. This included taxing opium farmers, taxing and protecting drug convoys, and taxing heroin laboratories. The militia also receive large donations from narcotics traders.

Afghan officials, quoted by the UN report, estimate that the Taliban earned about $US100 million from the poppy economy in 2011-12. But the total drug crop is estimated at between $US3.6 billion and $US4 billion.

“This suggests that the Taliban does not make great efforts to exploit this potential source of revenue,” said the report.

The Taliban can finance the insurgency in the main poppy provinces of Helmand, Kandahar and Oruzgan but “the amount of money raised from the drug trade is insufficient to meet the cost of insurgent activity elsewhere,” it added.

The sanctions experts said the Taliban had made foreign development funds a “lucrative source”.