The Israeli government decided formally on Wednesday to stop transferring tax revenues collected by Israeli custom officers on behalf of the Palestinian Authority. The move is a punishment for Palestine being approved by the UN as a non-member state.
Finance Minister Yuval Steinitz issued a order to block the transfer of NIS435m (£78,500m), the tax revenues collected this month. According to Israeli newspaper Yedioth Ahronoth, Steinitz said, "This measure comes as a result of the Palestinian unilateral step in the UN."
Meanwhile, Steinitz's cabinet colleague, far-right Foreign Minister Avigdor Lieberman, said that Israel would continue blocking tax revenues for four months. "They will not receive any penny for the next four months," the Jerusalem Post quoted him as saying.
Lieberman said that the money will be used to cover the PA's debts to Israeli companies which supply water and electricity to the Palestinian territories. "Then, in four months time we will see what to do," he added.
Israel's move comes in defiance of the European Union, which called explicitly last week for Israel not to undermine the financial situation of the PA. The EU also criticised Israel's plans to build new illegal settlement units in the "E1" areas in the occupied West Bank.
The Palestinian Authority is facing a difficult financial situation. Its Finance Minister, Nabeel Kesis, commented, "The PA will not be able to fulfil its financial duties this month if Israel continues to block the tax revenues."