Israel to Renew Transfer of Tax Funds to Palestinian Authority

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Israeli Prime Minister Benjamin Netanyahu announced Monday Israel will renew the normal transfer of the tax funds it collects for the Palestinian Authority.

The move comes in the wake of United States President Barak Obama's visit to Israel and the West Bank and in response to requests from Washington.

Israel froze the tax revenues after Palestine earned recognition as a nonmember observer state at the United Nations in November 2012 – the culmination of a bid led by PA President Mahmoud Abbas. Close to a billion shekels in Palestinian tax revenues were confiscated to offset the PA’s debt to the Israel Electric Corporation and other Israeli organizations.

While in the country last week, Obama and U.S. Secretary of State John Kerry asked Netanyahu to introduce a series of confidence-building measures in hopes of kick-starting negotiations between Israel and the PA, Haaretz reported Sunday.

The U.S., which announced it would transfer $500 million of aid to the PA, also hopes the renewal of tax-revenue transfers by Israel will help ease the PA’s liquidity crisis. Israel has transferred tax revenues to the PA over the past two months to prevent its economic collapse, but each case was approved independently.

During a cabinet meeting Sunday, Netanyahu informed minsters he intends to resume the transfer of tax funds to the PA in full and as normal, returning to the status quo before November 29, 2012. Following this step, no special authorization will be needed to transfer the funds each month, and the prime minister will have to take action to halt the transfers again.

It is unclear whether the cabinet voted on the matter. Netanyahu’s decision "was made as per the opinion of the Security Cabinet,” said the Prime Minister’s Office. "Finance Minister Yair Lapid will direct personnel of his ministry to resume the transfer of funds."

Netanyahu had planned to announce the decision Sunday and told the U.S. as much. But at the last minute, he decided to wait until a few hours before the start of the Passover holiday, when politicians and the Israeli public are paying less attention to the news.

Prime Minister Benjamin Netanyahu, left, and Palestinian President Mahmoud Abbas.Credit: Ronen Zvulun , AP , Mohamed Torokman, Reuters

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