Israel withholds $26m tax revenue from PA to ‘compensate Israelis’

Israeli Finance Minister Bezalel Smotrich withheld NIS 100 million ($26 million) in tax funds intended for the Palestinian Authority (PA) on Sunday, redirecting it to pay compensation to “Israeli victims” of Palestinian resistance operations. The far-right extremist announced on X that the move was taken to penalise the PA for its financial support to the families of Palestinian citizens imprisoned by Israel.

“The struggle against terror is not just a military struggle, but also a fight that includes a war against the wild incitement of the Palestinian Authority and the terrorist funds which it directs from its budget to the families of terrorists [sic],” claimed Smotrich. “We will continue to protect the safety of Israel’s citizens and fight with all the tools available to us against terrorism and its supporters.”

המאבק בטרור איננו רק מאבק צבאי אלא מאבק משולב הכולל מלחמה בהסתה הפרועה של הרשות הפלסטינית ובכספי הטרור אותם היא מפנה מתקציבה למשפחות מחבלים.

כפי שנהגתי מאז כניסתי לתפקיד, פסקי דין כנגד הרשות הפלסטינית מועברים לעיקול מיידי מהכספים המועברים לרשות הפלסטינית ומועברים לפיצוי משפחות… pic.twitter.com/5NuekdS3vG

— בצלאל סמוטריץ’ (@bezalelsm) August 4, 2024

Israel collects tax on goods that pass through the occupation state into the West Bank on behalf of the Palestinian Authority and transfers the revenue to Ramallah under a long-standing arrangement. Ever since the Hamas-led cross-border incursion on 7 October, Smotrich has withheld sums earmarked for administration expenses in Gaza. Israel also deducts funds for electricity, water and the cost of treating Palestinians in Israeli hospitals.

According to Palestinian officials, the amount deducted is far below the amount tax collected each month.

The ultranationalist Smotrich has always been opposed to sending funds to the PA, which uses the money to pay public sector wages. He accuses the authority of supporting the 7 October attack in Israel led by Hamas, which has been the de facto government in Gaza since winning the 2006 Palestinian legislative election.

Basic infrastructure has worsened, government employees are being paid a fraction of their salaries, and health services are collapsing, say PA officials. These are signs of a deep financial crisis that has crippled the administration led by President Mahmoud Abbas in the Israeli-occupied West Bank, prompting questions over its future, even as the United States and other countries are pressing for a “revitalised” PA to run the Gaza Strip when fighting there ends.

READ: Torture, sexual violence against Palestinian detainees ‘war crimes’, Amnesty says