Palestinian President Mahmoud Abbas is refusing to accept tax revenues from Israel amounting to some $180 million, saying his government won’t accept anything less than the full amount they are owed.
Every month, Israel collects some $190 million in customs duties on goods being imported into the Palestinian territory and transfers it to the PA.
The PA announced back in February that it would refuse to collect the revenues after Israeli authorities decided to enforce a $10 million per month deduction, meant to represent the amount paid by the PA to the families of political prisoners and “martyrs” killed by Israel.
According to Israeli media reports, earlier this month, Israeli authorities transferred the partial revenues to PA bank accounts, “in the hope the authority would quietly accept payment,” the Times of Israel reported.
To no avail, the Israeli finance ministry found the money returned two weeks later, the report added.
“Israel is trying by all means to legitimize the deductions from our money; but we will not accept it,” Abbas said during a cabinet meeting in Ramallah on Monday, according to the PA-owned Wafa news agency.
“Israel will eventually return our money our way and not its way,” he continued, saying that Israel was “stealing” the money of martyrs and prisoners.
Since the beginning of the year, the PA has enforced a series of austerity measures aimed at remedying the financial crisis brought on by the withholding of tax revenues, and the repeated cutting of financial aid from the US to the Palestinians.
The authority slashed the wages of its public employees in half, in addition to stopping all promotions, appointments, and bonuses; halting all new property and car purchases; and cutting expenses on travel, hosting guests and fuel.
Abbas’ refusal to accept the tax revenues, which account for more than half of the PA’s general budget, has plunged the government into its worst financial crisis in years.
Just the day before Monday’s announcement, Israeli Prime Minister Benjamin Netanyahu met with his Finance Minister Moshe Kalon to discuss a plan of action should the situation escalate into a full blown collapse of the PA’s financial systems.
“The two met Sunday to discuss what plans to put in place and what possible moves would keep the Palestinians solvent, amid fears that financial woes could cripple the Palestinian economy and destabilize the West Bank,” the Times of Israel said, citing Israeli television news reports.
Despite efforts by the Arab league, which pledged last week $100 million per month to the PA, to remedy the PA’s financial turmoil, it remains to be seen just how widely the effects of the crisis will be felt across Palestinian society.
According to Middle East Eye, the tax dispute has already “impacted payments to some 170,000 civil servants, whose salaries add up to $2.5 billion, making up $14.5 billion of the PA’s GDP.”
The new austerity measures, coupled with already high rates of poverty and unemployment, few prospects of free and democratic presidential elections, and the widely unpopular social security law, will only exacerbate the already dire situation of Abbas and the PA.