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Fragile and conflict-affected states face distinctive budgeting challenges: damaged tax administrations, weak stakeholder trust, and volatile economic activity that undermines domestic revenue collection. Yet a credible and inclusive revenue strategy can strengthen fiscal sovereignty and reduce external dependency. The core aim is to mobilize resources with minimal destabilization by aligning revenue measures with social protections, job creation, and long-term development goals. This requires sequencing reforms, building institutional capacity, and fostering broad-based ownership across government, civil society, and the private sector. A phased approach helps manage political risk while delivering visible benefits to ordinary citizens.

A practical framework begins with improving tax morale and administrative efficiency. This entails simplifying tax laws, increasing the ease of voluntary compliance, and reducing the cost of tax administration for small and medium enterprises. Digital tools can reduce corruption and improve transparency, while data-sharing between agencies closes loopholes. Revenue mobilization must be paired with anti-corruption safeguards and robust grievance mechanisms. In conflict zones, safeguarding revenue collection from exploitation by armed actors is essential. Transparent audits, citizen budgets, and participatory budgeting can demonstrate accountability and reinforce trust in public institutions.

Trust is the cornerstone of successful domestic revenue efforts in fragile settings. When communities see that tax money funds essential services—schools, clinics, and roads—they are more willing to contribute. Inclusive dialogue with local leaders, civil society, and youth groups helps align revenue measures with real needs rather than punitive taxation. Policies should explicitly channel resources to resilience-building programs and social protection, ensuring that the burden does not fall disproportionately on vulnerable households. Mechanisms for feedback, redress, and performance reporting must be central to the reform agenda, not afterthoughts.

Beyond consultation, credible implementation matters. Governments should publish revenue projections, tax expenditure analyses, and spending plans in accessible formats. Budgetary transparency reduces suspicion and invites external scrutiny from donors and watchdogs without compromising security. In parallel, tax reforms should target broadening the base rather than raising rates on the poor. Franchise-like voluntary contributions, property taxes, and value-added taxes can be redesigned to minimize regressivity. Reforms must also consider regional disparities, ensuring that rural and urban communities benefit equitably from revenue mobilization.

A progressive, targeted approach helps protect the most vulnerable while expanding the tax base. Flat or punitive measures against low-income households can ignite resentment and undermine social cohesion, especially in fragile states. Instead, policymakers can focus on wealthier segments, formalizing informal sectors, and gradually extending coverage to underserved areas. Tax exemptions should be time-limited and reviewed regularly to prevent distortions and rent-seeking. Asset-based taxes, environmental levies, and consumer taxes on non-essential goods, paired with targeted rebates for the poor, can improve equity. Social safety nets remain essential during reform to prevent backlash.

Complementary to reform, revenue collection must be predictable and stable. Budgetary planning in volatile environments benefits from multi-year fiscal frameworks, contingency reserves, and realistic revenue forecasts. Fiscal rules anchored in medium-term expenditure frameworks help shield critical services from political shocks. Donor coordination should align with national priorities, reducing abrupt policy shifts that confuse households and businesses. Developing domestic revenue channels that are resilient to conflict requires continuous investment in public trust, professional civil service development, and the establishment of independent revenue authorities with clear mandates.

Capacity-building strengthens the technical ability of tax administrations to collect revenues fairly and efficiently. Training programs for tax inspectors, auditors, and information technology staff should be ongoing and context-specific, incorporating lessons from other fragile contexts. A merit-based recruitment system reduces risk of politicization and corruption. Equally important is the establishment of independent oversight bodies and internal audit functions that operate with autonomy and safeguards. When citizens perceive that revenue authorities are professional and impartial, compliance improves, and the overall credibility of the reform increases.

Accountability mechanisms must be robust and accessible. Public dashboards showing revenue performance, expenditure outcomes, and service delivery indicators empower citizens to monitor progress. Whistleblower protections, complaint hotlines, and independent evaluators create consequences for mismanagement, while ensuring that reluctant actors are deterred from abusing the system. Regular public engagement events, budget open days, and localized budgeting discussions help translate macro fiscal reforms into tangible improvements in daily life, building a virtuous cycle of participation and trust.

Social protection acts as a strategic bridge between revenue expansion and public consent. By linking tax measures to direct benefits—such as healthcare subsidies, education grants, and food assistance—governments demonstrate that reform serves people, not merely state machinery. Financing these protections through efficient, targeted revenue increases helps prevent the growth of informal markets and shield vulnerable households from price shocks. In post-conflict settings, temporary, scalable protection schemes can stabilize livelihoods while institutions consolidate capacity to implement long-term reforms.

Designing revenue measures with a sunset or graduation plan supports legitimacy over time. If certain measures are temporary, communities are more likely to accept them as pragmatic tools rather than permanent constraints. Clear criteria for phasing out or modifying taxes based on meeting specific development indicators create a well-defined path toward resilience. This approach reduces fear of permanent loss of income and cooperation remains stronger when citizens see a direct correlation between taxes and improvements in well-being and security.

For lasting impact, reforms must be embedded in a broader, conflict-sensitive development strategy. This means coordinating fiscal policy with security sector reform, land tenure simplification, and transparent procurement to support domestic value chains. Economic resilience is achieved when macroeconomic stability, private sector development, and inclusive governance converge. International partners can align conditionality with national priorities and respect sovereignty, avoiding coercive or abrupt policy measures that could inflame tensions. A credible domestic revenue system in fragile states rests on patience, coherence, and consistent messaging about long-term benefits to society.

Ultimately, successful mobilization of domestic revenue in fragile and conflict-affected states hinges on empathy, evidence, and equity. Policymakers must listen to diverse voices, adapt to shifting realities, and communicate progress with clarity. By sequencing reforms, safeguarding the vulnerable, and investing in capable institutions, governments can expand resources without deepening grievance. The path is iterative, requiring mid-course corrections and sustained commitment to accountability. When communities perceive tangible improvements tied to fair taxation, resilience grows, peace becomes more attainable, and fiscal legitimacy strengthens over time.