NEW analysis shows Islamic State raised an estimated $80 million a month with half of the money coming from taxation.

Analyst IHS has calculated the figure based on open source intelligence including through monitoring Arabic-language social media.

While there has been a focus on IS’s oil revenue, it only makes up 43 per cent of its funding and is less than what it gets from taxation and confiscation, which provided 50 per cent of its funding this year.

According to IHS, Islamic State has six sources of revenue:

• Production and smuggling of oil and gas;

• Taxation on the profits of all the commercial activities held in areas under its control;

• Confiscation of land and properties;

• Trafficking of drugs and antiquities;

• Criminal activities such as bank robbery and kidnap for ransom; and

• State-run businesses such as running small enterprises including transport companies or real estate agencies.

“Unlike al-Qaeda, the Islamic State has not been dependent on money from foreign donors to avoid leaving it vulnerable to their influence,” IHS senior analyst Columb Strack said.

Instead IS charges a 20 per cent tax on services it provided in its territory including electricity, mobile phone networks, internet access, retail, industry and agriculture.

This has become a significant source of funding as the US-led coalition’s efforts to target the group’s oil income seem to have degraded the group’s refining capacity and ability to transport the oil on tankers.

Disrupting the funds IS gets from tax will be much harder.

“Tax revenues are much harder for the US-led coalition to target without having a substantial negative impact on the civilian population, and would most likely be counter-productive,” Strack said.

The IHS Conflict Monitor has already found some evidence that the group is struggling to balance its budget.

There have been reports of cuts to fighters’ salaries, price hikes on electricity and other basic services and the introduction of new agricultural taxes.

But while the Islamic State’s refining capacity has been largely destroyed, there is likely to be some reluctance to completely destroy oil wells, given the risk of irreversible damage to the fields, and the potential environmental impact.