Palestinians to Cut Employees' Salaries in Half After Israel Withholds Tax Money

PA finance minister Shukri Bishara said that most of the salary cuts will come from high-salary officials, and in all cases no official will receive a salary below $550

A rally in support of Palestinian President Mahmoud Abbas, Ramallah, West Bank, February 25, 2019.
A rally in support of Palestinian President Mahmoud Abbas, Ramallah, West Bank, February 25, 2019.Credit: \ MOHAMAD TOROKMAN/ REUTERS

The Palestinian Authority will only pay its employees half of their salaries after the PA decided not to accept the tax funds transferred from Israel because it had deducted more than 40 million shekels ($11 million) from the amount transferred monthly, the Palestinian finance minister said Sunday at a press conference in Ramallah.

Palestinian President Mahmoud Abbas touched on the issue in a meeting with Meretz Chairwoman Tamar Zandberg on Sunday, saying "We are turning to Israel and telling them: You do not have the right to hold our money. Israel is responsible for the economic issues that we are facing at the moment, but our stance and policy is immutable: A two-state solution, the fight against terror and the return of our money."

Meretz Chairwoman Tamar Zandberg shakes hands with Palestinian President Mahmoud Abbas, Ramallah, West Bank, March 10, 2019.Credit: \ POOL/ REUTERS

Shukri Bishara, the PA finance minister, said that most of the salary cuts will come from high-salary officials, and in all cases no official will receive a salary below 2,000 shekels ($550).

The economic crisis within the PA deepened this month with the delay of a payment of 660 million shekels from Israel, due to a PA decision not to accept money from Jerusalem unless the payment was made in full.

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Bishara said Sunday that during the holy month of Ramadan, in May, PA employees will receive about two thirds of their salaries and said that the effects of the financial crisis will be felt in government offices as well. According to the minister, there will be no new appointments, planned promotions will be delayed, and no additional payments will be made. These cuts are meant to allow the PA to continue paying employees' salaries.

Last month the Israeli security cabinet decided to freeze the transfer of 500 million shekel to the PA monthly in accordance with a law deducting money paid to the family of terrorists from tax funds the PA receives from Israel. According to the Israeli defense establishment the half a billion shekels of frozen funds is equal to the amount of money that the PA transfers to the families of security prisoners.

As reported by Haaretz on Sunday morning, there is mounting criticism by the Shin Bet and the army toward the political echelon over the cuts to the PA funds. Top officials in both organizations addressed the topic in closed discussions, warning that the financial crisis within the PA could destabilize Abbas's hold on power.

They argued that the law lacks a loophole that would allow the money to be transferred due to security concerns. The officials cautioned that if transferring the money could prevent a violent escalation, the law will make it difficult to take that step.

The same sources noted that the PA is struggling to pay its employees' salaries, and has yet to transfer February's paychecks. According to their assessment, the PA could cease to function in two months.

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