Palestinians Continue to Reject All Israeli-collected Tax Funds, Warn of Economy's Collapse

'Israel is robbing Palestinians' by deducting funds for Palestinian prisoners and families from monthly tax revenues sent to Ramallah, Abbas says

Palestinian President Mahmoud Abbas chairs a session of the weekly cabinet meeting, in Ramallah in the Israeli-occupied West Bank, April 29, 2019.
Majdi Mohammed/Reuters

The Palestinian Authority has reiterated again that it will not accept any tax revenues that Israel collects on its behalf, as long as Jerusalem continues to deduct funding earmarked for Palestinian prisoners and their families.  

At a cabinet meeting in Ramallah on Monday, Palestinian President Mahmoud Abbas expressed concern about the perilous state of the PA economy, which he blames on Israel, and warned that the authority is on the verge of collapse.

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Under the 1994 Paris Protocol, which established a customs union between Israel and the PA, Israel is supposed to collect value-added tax, import duties and other taxes for the Palestinians and hand them over on a monthly basis. The transferred monies total hundreds of millions of shekels each month.

A Palestinian source told Haaretz that Israel had transferred the revenues for February, after making its deductions, but the PA returned the money. According to the source, the taxes Israel currently transfers constitute 63 percent of the Ramallah-based government's budget, and even with cutbacks the PA instituted, the deficit cannot be covered.

Among other things the Palestinian ministries have cut their expenses by one half and will pay only 60 percent of government employees’ salaries. The PA also reduced funding for covering medical treatment for Palestinians in Israel.

“We want to live under good neighborly terms with Israel, but not at any price,” Abbas declared at the meeting on Monday, adding that Israel should repay all the money as set forth in the original agreement with the Palestinians – not just do as it pleases.

“There is an agreement between Israel and the PA that any cut that is made must be consensual,” Abbas said. “Israel is not doing that and is robbing the Palestinians of their money.”

Palestinian Civil Affairs Minister Hussein al-Sheikh said he had met over the weekend with the Israeli Finance Minister Moshe Kahlon, and told him about the PA’s position.

Abbas said the Palestinians had apprised a number of countries about their dire financial situation, adding that the PA is calling for implementation of the Arab League resolution ratified this month at a summit in Tunisia, whereby the Palestinians would be given an economic safety cushion amounting to $100 million per month. The Palestinians are still waiting for Arab League’s clarifications on this matter. The safety cushion could be critical for the Palestinians at this time, the source told Haaretz.

Israel collects hundreds of millions of shekels a month on behalf of the Palestinians, but in February, the Israeli government decided to reduce the sum it transfers, based on a law enacted in July 2018. It states that each year, the Israeli defense minister must tell the security cabinet how much money the PA transfers to convicted Palestinians terrorists jailed in Israel, to their families and to released prisoners. The annual sum must be divided by 12 and the monthly transfers Israel sends to the PA must be reduced by resulting amount, according to the law.