In Nagaland, two words are interchangeable: taxation and extortion.

Naga separatist groups operating in the region collect money. What name you give it depends on what you think of these groups. This interchangeability of terms is eloquent – it speaks of the political limbo that the state has been trapped in for decades now.

The issue of extra-legal payments hit the headlines two years ago, when widespread protests broke out in the state. In May 2013, representatives of the Dimapur Chamber of Commerce complained to the Dimapur Naga Council, a social organisation in which all the tribes in Dimapur district are represented. The burden of multiple payments to underground groups had become unbearable, they said; it was choking businesses and crippling the market.

The Dimapur Naga Council called a meeting where business communities, student bodies, and social organisations like the Naga Women’s Hoho were in attendance. They declared themselves against such “injustice”, and formed the Action Committee Against Unabated Taxation, or ACAUT. (Today, the acronym stands for Against Corruption and Unabated Taxation, to reflect the group’s expanded sphere of activities.)

Back in 2013, ACAUT took to the streets demanding “one government, one tax”. All major tribal groups in Nagaland, including the Nagas, are listed as scheduled tribes under the Constitution, and are exempt from income tax under Section 10(26) of the Income Tax Act. But ACAUT was not referring to taxes levied by the state or Union government – it was protesting multiple payments made to different factions, and demanding one tax levied by one rebel government.

“Let me make this very clear – ACAUT is a mass movement and not an anti-national movement,” said Khekaghu Muru, co-chairman of ACAUT. “We are not against parallel governments raising tax, but it has to be one tax. We believe that if we stop paying multiple taxes, the Naga political groups will listen to the voice of the people and will unify.”

The ACAUT protests, the first of its kind, opened up a new conversation on the legitimacy of the demands made by underground groups.

Taxation: ‘We are running a government’

Since its formation in 1980, the National Socialist Council of Nagaland has split into four different factions. Then there is the Naga National Council, which is divided broadly into two factions: Accordist and Non-Accordist. Most of these factions run their own governments, from their respective headquarters.

Two of these groups are based near Dimapur. At Hebron, the NSCN (Isak-Muivah) runs the National Socialist Council of Nagaland-Government of the People’s Republic of Nagalim, or NSCN-GPRN. At Khehoi, the NSCN (Konyak-Kitovi) operates the Government of the People’s Republic of Nagalim-Nationalist Socialist Council of Nagaland (Konyak-Kitovi), or the GPRN-NSCN.

Both groups are candid about their tax collection. They are running a revolutionary government, they say, and any government needs money. Both claim to be a “people’s movement” mandated by the Naga public.

Khehoi takes annual "donations". “We go to business houses once a year,” said an NSCN(KK) leader. “We can’t survive without donations.”

Hebron operates a more elaborate system. A member of the Naga Army stationed at Hebron recalls that before the ceasefire was signed, when Hebron fought a guerrilla war from the jungles, people from nearby villages supported and protected them. The guerrillas lived on whatever the villagers provided – a bushel of rice, a bag of salt…

After the ceasefire, a formal system of taxation was put in place. These are not random sums extracted at whim. “We tax trucks coming in with goods from Assam or Manipur,” said a functionary at Hebron. “Sometimes we charge the tax at the stations. We have flat rates for every item. We also take an annual house tax from villagers. The amount is nominal – Rs 100-200 a year.” The so-called finance ministry operates the system and keeps accounts.

Of course, a government that collects taxes is expected to provide services in return. “No, that hasn’t happened yet,” said the official, after some hesitation. “We are in the revolutionary stage. That will happen when the settlement comes.”

He was referring to the framework peace agreement signed between the government and the NSCN(IM) on August 3, which is seen as preamble for a peace accord that promises to bring a political settlement to the seven-decade-long Naga insurgency.

Extortion: it’s a law and order problem

The ACAUT protests underline how the tendrils of the parallel taxation networks have spread across institutions in Nagaland, drawing in the state and Central government and creating a nexus between separatists, politicians and state employees.

The state government has its own defense. “The government of India calls it a law and order problem,” said Levi Rangma, a member of the legislative assembly. “But when it signed ceasefires with the NSCN (IM) and other groups, it indirectly recognised these organisations. So now, if the Naga state government tries to intervene, the groups will say, ‘Who are you?’”

Muru of ACAUT explains how it works. “Each of these groups has a finance ministry," he said. "These ministries send taxation letters to the various heads of department, accountants and drawing and disbursing officers in the state government. They are told to deduct a particular percentage of money for them [the Naga political group in question] for that financial year. Some state government officials will comply under duress; others have their own interests.”

A state government official might collect more than the amount demanded, for instance, and pocket the difference. “If any state government official is found to be indulging in this, we file an FIR and take legal action," Muru said. "This practice has now gone down drastically.”

Earlier, each group would demand a deduction of about 24% from the salaries of all state and Central government employees, excepting those in the paramilitary and armed forces. The deduction was made once a year, and was in addition to the other demands made by the groups. So if four groups made the same demand in a particular area, it could amount to a 96% cut in salary. This practice is now on the wane, Khekaghu says.

ACAUT draws a distinction between such collections and actual extortion. “I don’t think any of the parallel governments would support extortion,” said Muru. “That is carried out only by anti-social elements acting in the name of Naga political groups but drawing money for their own gain. We have filed FIRs against individual cadres, but not against any organisation.”

Harassed police officials agree. Often, local goons claiming to act in the name of some political group extract money. The law, however, does not distinguish between thug and separatist, blackmail by mafia or taxation by a political group. When an FIR is filed, the accused is charged with extortion.

Problem of policing

Collections by separatist groups is not new. The Naga insurgency has been sustained by such practices for decades. However, it became more visible once the ceasefires were signed, and Naga political groups had more freedom in cities like Dimapur and Kohima. Earlier, when the armed groups operated mostly in rural areas, there wasn’t much vocal resistance. “With business communities [in the cities] now feeling the pinch, and with the growing variety of taxes, it started getting noticed,” said Shouka Khaketo, additional commissioner of police for crime, Dimapur.

Several factors combine to make policing difficult – the nexus between the state government and separatist groups, the intimate social ties between separatist cadres and ordinary people who both inhabit close-knit communities, and the conflicting impulses of frustration with parallel taxation and sympathy with the Naga political cause.

“We have to follow certain procedures, function within a judicially recognised framework,” said Khaketo. “People may express their frustrations and resentments in the media and various other platforms but officially, very few have come forward and complained. Until people make a complaint, we cannot make arrests. Some arrests have been made, where we acted on complaints by people or inputs from intelligence agencies that a taxation drive was taking place somewhere.”

An arrest, however, is merely the beginning – then comes the difficulty of successfully prosecuting such cases. Witnesses turn hostile, complainants do not want to pursue the cases, and courts often let the accused out on bail, making it difficult to track them down later. In Dimapur at least, the ACAUT protests have not led to a spike in the number of complaints. In fact, quite the reverse. “In 2012, we registered 100 cases; in 2013, 65 cases, and in 2014, 75 cases,” said Khaketo. "In 2015, we have just reached the 60 mark."

Meanwhile, the conundrum remains. When does taxation become extortion, and vice versa? The riddle can be solved only by a political settlement, where the role of Naga political groups and their relationship with the state is more clearly defined. For now, the corruption and factionalism that has crept into the system has delegitimised parallel taxation in many people’s eyes.

“Taxation is extortion,” said Niketu Iralu, a social activist and senior advisor to ACAUT. “Taxes are now being collected by those who are unworthy of the Naga people’s aspirations.”