Israel did not agree to let PA collect fuel taxes under new deal, sources say
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Israel did not agree to let PA collect fuel taxes under new deal, sources say

Ramallah receives NIS 2 billion in duties that Israel gathered for it, despite previous refusal to accept funds until Israeli law targeting PA payments to terrorists is frozen

Adam Rasgon is the Palestinian affairs reporter at The Times of Israel

Palestinian Authority President Mahmoud Abbas speaks at the Palestinian Peace and Freedom Forum in the West Bank city of Ramallah on February 6, 2019. (Abbas Momani/AFP)
Palestinian Authority President Mahmoud Abbas speaks at the Palestinian Peace and Freedom Forum in the West Bank city of Ramallah on February 6, 2019. (Abbas Momani/AFP)

Two sources familiar with a recent agreement between Israel and the Palestinian Authority, that aimed to partially resolve a dispute over the tax funds that the Jewish state collects on behalf of Ramallah, have pushed back against a senior Palestinian official’s portrayal of its details.

The sources, who spoke on condition of anonymity, denied that Israel agreed to transfer responsibility for collecting taxes on fuel imports to the West Bank and Gaza Strip to the PA.

They made the comments after Hussein al-Sheikh, a senior Palestinian official and a close confidant of PA President Mahmoud Abbas, claimed to the Ma’an News Agency on Saturday that Israel consented to transfer the responsibility for collecting duties on fuel imports to Ramallah.

“There is currently no binding cabinet decision to exempt the Palestinian Authority from paying taxes on fuel it purchases from Israel,” one of the sources told The Times of Israel, adding that the government’s approval and the signing of a formal agreement between Israel and the PA would be required for such a move to materialize. “Israel is still charging the PA tax on fuel and it is still paying it.”

Trucks carrying fuel for the Gaza Strip enter Rafah through the Kerem Shalom crossing between Israel and the southern Gaza Strip on March 16, 2014. (AFP Photo/Said Khatib)

Another source confirmed that Israel did not agree to hand over responsibility for collecting taxes on fuel imports to the PA.

The Paris Protocol, the economic annex of the Oslo Accords, agreements signed between Israel and the Palestine Liberation Organization in the 1990s, states that the Jewish state is responsible for collecting taxes on fuel imports to the West Bank and Gaza and then transferring them to the PA.

A move to shift the responsibility for collecting taxes on fuel imports to the West Bank and Gaza would entail the PA taking charge of gathering approximately an additional NIS 200 million ($56 million) in taxes every month.

Sheikh, who has met with Israeli officials a number of times in the last several months to discuss the dispute over the tax funds, did not respond to a request for comment.

He alleged to Ma’an in a phone call broadcast on its channel on Saturday: “For the past seven months, we have been demanding that the Israeli side provide us with petroleum without the fuel tax. In the last few days, we succeeded in the negotiations. Today, this agreement was implemented, which means the Palestinian National Authority is being provided with petroleum without the fuel tax being levied on it. This means that taxes [on fuel imports] will begin to be collected internally. They will not be collected by Israel.”

One of the sources, however, claimed that Israel and the PA could discuss the possibility of the Jewish state turning over responsibility for collecting taxes on fuel imports to Ramallah following the national elections in September and the formation of a new government.

“It is not possible to discuss this before the formation of a new government,” the source said. “The Palestinians understand that.”

A Palestinian street vendor sells balloons near a market ahead of Eid al-Adha in the West Bank city of Ramallah October 14, 2013. (photo credit: Issam Rimawi/Flash90)

The elections are slated to take place on September 17 and the formation of a new government likely will take several weeks.

Asked what the agreement to partly resolve the dispute over the taxes Israel collects on behalf of the PA entailed, the sources said that it essentially included the Palestinians accepting a bank transfer of NIS 2 billion ($566 million) in duties that the Jewish state has gathered for them over the past several months.

“The PA agreed to take a reimbursement of the taxes on fuel Israel has collected for it over the past seven months in addition to an advance of those which it will gather in the next few months,” one of the sources said, adding that the PA also agreed to pay off some debt it owes to the Israel Electric Corporation.

The same source said the transfer took place on Sunday.

Israel started to implement a new law in February, allowing the government to deduct some $11.5 million from the taxes that it collects every month on behalf of the PA. Israeli officials have said the sum withheld is equivalent to what the PA pays on a monthly basis to security prisoners, including terrorists, and their families.

PA President Mahmoud Abbas poses with prisoners released on October 30, 2013 as part of Israeli-Palestinian peace negotiations (Issam Rimawi/Flash90)

PA President Mahmoud Abbas has protested the Israeli law and vowed to refuse receiving any of the hundreds of millions of shekels in taxes that Israel collects for the PA, if it carries out deductions on them.

The sources, however, said that the PA accepted NIS 2 billion transfer without Israel halting the implementation of the law.

Israel maintains that the Palestinian policy of paying security prisoners and their families incentivizes violent attacks against Israelis.

The Ramallah-based Palestinian leadership contends that it seeks to provide social welfare to Palestinian families and make up for what it describes as an unfair military justice system.

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