PA: rise in tax revenue led to budget surplus

The Finance Minister of the Palestinian Authority said today that the budget surplus was $72 million in the first half of 2022 as a result of a notable increase in local and tax clearance revenue, Wafa news agency has reported.

Shukri Bishara said that in addition to the increase in tax revenue, the reduction of some expenditure items in line with a strategic reform plan contributed to the surplus.

The plan envisages a reduction in the payroll from 100 per cent to 70 per cent of the revenue by the end of this year, and down to 50 per cent in future years. The payroll, explained Bishara, will be reduced through several measures, namely optional early retirement, halting the disbursement of undeserved allowances and the rationalisation of government hiring and promotions.

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The minister described the payroll and stipend bill, which amounts to NIS950 million ($284m) each month, as a grave threat to the sustainability of government finances as it has increased steadily over the past decade. It is now greater than 100 per cent of the government’s income.

The reform plan also envisages restructuring the health sector as the cost of medical referrals account for 30 per cent of the budgeted operating expenses and totalled NIS974 million in 2021.

It also includes restructuring net lending, the amount Israel deducts from Palestinian tax revenue to cover utilities such as water, electricity and sanitation, and medical transfers. The net lending figure was $4.126m in 2021.