[ToI] Israel has transferred NIS 435 million ($116 million) of withheld tax revenues to the Palestinian Authority, the Israeli and PA finance ministries confirm.Finance Minister Bezalel Smotrich agreed to partially transferring the last three months of withheld tax revenues and extend a corresponding banking agreement for Israeli and Palestinian banks by an additional four months.
The moves were part of a quid pro quo leveraged by Smotrich, which saw the Israeli security cabinet last week approve a series of moves to expand Israel’s presence in the West Bank and sanction the PA over its support for cases against Israel at the International Criminal Court and International Court of Justice along with three European countries recognizing the State of Palestine.
Israel collects taxes on goods that pass through Israel into the West Bank on behalf of the PA and is required under the Oslo Accords to transfer them to Ramallah on a monthly basis.
The tax revenues make up some 70 percent of the PA’s annual income, and Israel’s withholding of the funds has Ramallah on the brink of collapse, only able to pay its employees roughly half of their salaries for the past several months.
Since Hamas’s October 7 onslaught, Israel has refused to transfer the portion of the tax revenues that the PA uses to pay for services and employees in Gaza, claiming that the money could be seized by Hamas. These funds make up some 40% of the monthly transfers.
Israel also deducts funds for electricity, water and costs to treat Palestinians in Israeli hospitals in addition to offsetting the payments the PA makes to terror convicts and the families of slain attackers.
Even after all of these deductions, Palestinian officials say the amount transferred is far below taxes collected each month.
The PA says in a statement about its cabinet meeting earlier today that its contacts and international pressure led Israel to make the partial transfer of funds. The PA would push to recover more than 6 billion shekels of withheld funds, to meet its financial obligations.