Palestinian President Mahmoud Abbas said Sunday he rejected Israel's offer of a partial transfer of tax revenues it collects for the Palestinians, following a three-month freeze.
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Abbas said Israel wants to keep a large part of the frozen tax funds to settle debts incurred by his Palestinian Authority, including for unpaid utility bills.
"They (the Israelis) said they are going to send us our tax money," Abbas said Sunday. "But when they sent it, they deducted one third ... We said 'no' and sent the money back, saying either we resort to arbitration or court."
An official at Prime Minister Benjamin Netanyahu's office said Israel had deducted a portion of the Palestinians' electricity, water and health bills from tax revenue it transferred and was "willing to transfer back to the Palestinian Authority the sum that was returned whenever it wishes".
Under existing agreements, Israel collects taxes and customs on behalf of the Palestinians and then transfers the sums to the Palestinian Authority, Abbas' self-rule government. The tax transfers account for 70 percent of the Palestinian Authority's revenue.
Israel froze the tax transfers in January, after the Palestinians applied to join the International Criminal Court, a step that could pave the way for possible war crimes charges against Israel and Abbas' Palestinian rival, the Islamic militant group Hamas. Israeli Prime Minister Benjamin Netanyahu announced after his re-election last month that the transfers would resume.
Palestinian officials said Israel owes the Palestinian Authority 1.8 billion shekels ($450 million) in frozen funds, but that Israel demanded to keep hundreds of millions of shekels for debt repayment.