An established and growing literature argues that institutional legacies shape long-run economic outcomes. Scholars have studied how Ottoman and colonial state-building played a significant role in shaping modern state institutions across the region, but these imperial legacies are often studied separately. In this paper, we bridge the gap between the late Ottoman period and Europe’s “moment” in the Levant to examine the long-run local effects of foreign taxation on the development of states’ fiscal capacity. We leverage new historical data from the Ottoman and colonial archives and contemporary surveys to evaluate the legacy of Ottoman taxation on colonial fiscal capacity in the Arab region, including the former wilayets of Beirut, Aleppo, Syria, Baghdad, and Basra, corresponding to contemporary Lebanon, Syria, Jordan, and Iraq. We find continuities between Ottoman and colonial levels of taxation, suggesting European neglect of fiscal capacity expansion. We then test whether historical fiscal capacity manifested in sub-national variation post-independence by matching historical taxation levels to municipal revenues in the 1950s through 1970s. Finally, we use data from the Syrian and Jordanian Household Expenditure and Income Surveys to leverage a natural experiment in the former Hawran sanjak to test whether the an area governed as one administrative entity under Ottoman rule demonstrates long-run differences in taxation due to divergent colonial experiences.