Israel recently cut the fuel tax it collects from the Palestinian Authority by 50 percent. The tax now stands at 1.5%, instead of 3%, as it has been since the economic agreements between Israel and the Palestinians were signed in 1994.
The offset leads to savings of NIS 80 million a year in the Palestinian Authority's budget and was published last week by the Coordinator of Government Activities in Judea and Samaria and the Gaza Strip.
Smotrich signs NIS 139 million deduction from Palestinian Authority funds // Yoni Rickner
According to the report, additional economic concessions that Israel has taken in favor of the PA since the beginning of 2023 total NIS 270 million. This is an increase in tax payments to the PA to an average of 730 million shekels a month, compared with about half a million three years ago. It should be noted that Israel is increasing the provisions for tax payments it supposedly collects on behalf of the Palestinians, even though the authorities are aware that a significant portion of the reports are forged and the goods are sold in Israel and not in the PA.
For example, Israel Hayom revealed that Palestinian importers provide false reports, and therefore Israel transfers hundreds of millions of shekels a year to the PA.
In addition, funds were transferred to the PA on the grounds of "accounting" and "greater transparency in VAT payments." In total, this is an additional budget of NIS 350 million that Israel has transferred to the Palestinian Authority since the establishment of the current government.
Netanyahu decided to cut the tax, Smotrich approved, photo: Amit Shabi
The decision to cut the fuel tax for the PA was made several months ago by Prime Minister Netanyahu. Finance Minister Bezalel Smotrich, who is in charge of the Tax Authority and responsible for the Civil Administration in Judea and Samaria, approved it on the grounds that it was Netanyahu's commitment to the American administration.
Congressional criticism
The Biden administration is indeed pressuring Israel to improve the economic situation in the West Bank, claiming that the PA is on the verge of economic collapse. However, Israel's willingness to cooperate with this policy, while Abbas continues to pay terror salaries handsomely, drew criticism of Israel in the US Congress.
At a Foreign Relations Committee hearing last week, members of Congress attacked the Biden administration's increased support budgets for the PA, in violation of the Taylor Force Act, which prohibits the administration from transferring funds as long as the phenomenon of terrorist salaries continues. Elliott Abrahams, who previously held senior positions in the US administrations, noted that during the Trump administration, "the US completely stopped economic aid to the PA, but it did not collapse economically because it received money from other sources, including the Israeli government, which keeps the PA watching."
In response, Congressman Rich McCormick of Georgia later told him, "If Israel makes mistakes, it's on it. But if we make mistakes with our money and fund terror that harms Israelis and Americans, that's on us."
U.S. Congress, archive, photo: AP
"Irresponsible"
Israel Hayom has learned that as part of its efforts to promote normalization with Israel, the United States is greatly increasing pressure to take steps that the administration defines as "strengthening the Palestinian Authority," including allowing the Saudis to funnel funds to the PA. However, due to Mahmoud Abbas' continued payment of terrorist salaries, ways are being examined to prevent the funds from reaching the Palestinian Authority.
One solution was presented last week by former US Secretary of State Mike Pompeo and businessman Sander Berger, who led laws in Israel and the United States to stop payments to terrorist salaries. In an article published in The Hill magazine, the two wrote that "it would be economically and morally irresponsible to distribute money through the corrupt Palestinian Authority, which funds terrorism."
Instead of direct support for the PA, the two propose establishing a fund bypassing the PA that would transfer its financial support directly to Palestinian bodies and organizations in need, but not through the Palestinian Authority.
Former US Secretary of State Mike Pompeo, photo: AP
"Instead of transferring aid through the PA, a new NGO will be established that will enable Saudis to support their Muslim friends in a responsible way that tangibly improves Palestinian lives and fosters civil society. We need to create a civilian mechanism that will help the Palestinians, not the Palestinian Authority to support terrorism," they write.
Following the publication of the article, the proposal contained in it is currently being considered, and may be an outlet that all parties can live with. The Americans and Saudis will be satisfied with increasing economic support for the Palestinians, while at the same time realizing Israel's interest in preventing the flow of Saudi funds to reinforce terrorism.
Attorney Morris Hirsch, a researcher at the Jerusalem Center for Public and State, said in response to the government's measures that "quietly, under the radar, the Israeli government is opening the Oslo Accords in order to benefit the PA. The handling fees (for fuel) were set and authorized in the economic annex of the Interim Agreement. Reducing them is a violation, or at least an agreement to reopen the Oslo Accords."
Lt. Col. (res.) Adv. Morris Hirsch, Photo: None
"Has there been a discussion about this in the government? Was there a discussion about this in the Knesset? When were we going to inform the public that the Oslo Accords had been reopened for negotiations? What did we get in return for this generosity? What did we get in return for agreeing to open the Oslo Accords in order to improve the PA? Has the PA stopped using the money we give it to incite terrorism? Not. Has the PA stopped using the money we give it to reward terrorists, including murderers of Jews? Not either. So what's going on here?"
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