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PA loses $350m per year due to Israel treaty violations

Israeli Shekels [File photo]
Israeli Shekels [File photo]

The PA loses $350 million per year because of Israel’s violations of the Paris Protocol, a report presented to the UN yesterday has revealed.

The PA report, titled “Stopping Fiscal Leakages”, was presented to the Ad Hoc Liason Committee which was held yesterday on the side lines of the UN General Assembly meeting. The report claimed “that at least USD 350 million per year is lost through Israeli policies regarding implementation of the Paris Protocol arrangements.” It added that “Israel continues to control over 70% of our revenues and intermittently use[s] it to blackmail the Palestinian Government.”

A large portion of this money is lost via unpaid taxes on Israeli economic activity in “Area C” of the occupied West Bank. The report estimates that this accounts for 35 per cent of the Palestinian budget deficit, with Palestine missing a total of $360 million in unpaid taxes since 2000.

Around 2,000 Israeli businesses or individuals profit from “Area C” in sectors including agriculture, fuel, gas, telecoms and electricity. Although prior to 2000 Israel collected taxes from these businesses and transferred the revenue to the PA, since then it has withheld these funds and not informed the PA about its commercial activities in the occupied West Bank.

This withholding of funds is in contravention of Annex III: Civil Affairs Protocol of the Paris Protocol, the economic annex of the Oslo Accords signed in 1994. Annex III says that: “In Area C, the powers and responsibilities regarding property tax will be transferred gradually to Palestinian jurisdiction that will cover West Bank and Gaza Strip territory except for the issues that will be negotiated in the permanent status negotiations.”

The Israeli Foreign Ministry, Finance Ministry, and Tax Authority all declined to comment on the revelations included in the report, according to i24 News.

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Israel often punitively withholds funds belonging to the PA. In July, Israel enacted a law to withhold part of the tax revenues it collects on the PA’s behalf to penalise the Authority for paying stipends to Palestinians jailed by Israel, their families, and the families of those killed by Israeli forces. The PA decried the move, claiming: “This is a declaration of war against the Palestinian people and their freedom fighters and prisoners who sacrificed for the sake of Jerusalem and the establishment of an independent Palestinian state.” At the end of June 2018 there were 5,667 Palestinian prisoners being held in Israel Prison Service facilities, according to Israeli human rights organisation B’Tselem.

Under Oslo II, sometimes known as the Taba Agreement, the occupied West Bank was divided into Areas A, B and C. “Area C” accounts for 60 per cent of the territory and is almost completely controlled by Israel. The UN Office for the Coordination of Humanitarian Affairs (OCHAoPt) explains that “most of Area C has been allocated for the benefit of Israeli settlements or the Israeli military, at the expense of Palestinian communities. This impedes the development of adequate housing, infrastructure and livelihoods in Palestinian communities, and has significant consequences for the entire West Bank population.”

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