Israel transfers withheld tax revenues to Palestinians

Israel will today hand over tax revenues to the Palestinian Authority which have been withheld since January as a protest against the Palestinian decision to join the International Criminal Court (ICC) in The Hague.

Israel collects about €120 million in taxes and customs each month on behalf of the PA and then transfers the sums to president Mahmoud Abbas’s West Bank government. The revenues account for more than two-thirds of the Palestinian budget and the decision to stop the monthly transfer triggered an acute financial crisis, forcing the Palestinian Authority to cut civil service salaries by 40 per cent.

Israel froze the tax transfer after condemning the Palestinian move to join the ICC as “a unilateral step that undermined prospects for a negotiated peace agreement”.

Punitive action

Following international criticism and a recommendation by the defence ministry to end the punitive action, fearing it could undermine Palestinian Authority rule, Israeli prime minister

Binyamin Netanyahu

agreed last month to resume the payments, but only after sums were deducted to cover Palestinian debts to the Israeli electricity corporation and Israeli hospitals. Mr Abbas refused to accept the money since Israel had made its deductions unilaterally.

Top-level meetings last week resolved the standoff and it was agreed that Israel will turn over to the Palestinians the tax funds it collected on its behalf in March and April without any deductions. The Palestinian debts will be deducted from the rest of the payments and a joint committee will decide on debt reductions from future payments.

Earlier this month, Mr Abbas had threatened to turn to the ICC over Israel’s refusal to fully release the funds. An Israeli government official said the transfer was a humanitarian gesture that will contribute towards regional stability.

Improve wellbeing

He said the move was one of a number of significant steps Israel has taken recently to improve the wellbeing of the Palestinian population.

“We are not fighting against the citizens of the PA [Palestinian Authority],” the official said. “It is important to us that the Palestinian residents live in comfort and dignity and we are open to any suggestions as to how to promote economic growth there.”

Nickolay Mladenov, the United Nations special co-ordinator for the peace process, welcomed the release of the tax revenues. "Withholding these revenues for over four months has undermined the stability of the Palestinian institutions. This agreement is an important step in the right direction for both sides."