Cash-strapped PA cuts salaries by 40% after tax revenue spat with Israel

The Palestinian Authority announces that it will be slashing the salaries of its civil servants by around 40 percent this month after the Ramallah government protested the Israeli decision to withhold tens of millions of dollars in tax transfers to the PA.

PA Finance Minister Dr. Shukri Bishara tells journalists at a press conference that most of the cuts will come from the salaries of higher paid officials, and that monthly wages below NIS 2,000 ($550) will not be affected.

He says some 50% of the thousands of PA employees will receive their paycheck of NIS 2,000 or less today.

Bishara says the PA has taken out a $50 million loan, and will continue to do so on a monthly basis “during the coming period.”

The PA announced the salary cuts last month after after Israel said it would withhold $138 million in tax transfers. The move came after Israel’s security cabinet approved the freezing of the funds over the PA’s payments to Palestinians jailed by Israel for terrorism and violence, and to the families of dead terrorists.

PA President Mahmoud Abbas says he will not accept any funds from Israel unless it provides the full tax sums it owes the PA.

Earlier today, Abbas blamed Israel for exacerbating the financial crisis in the West Bank.

“Israel is choking the economy and causing a financial crisis for the Palestinian Authority,” he said during a meeting with Israeli opposition politicians. “Despite this, we are maintaining our support for the two-state solution and fighting terrorism. Our money must be returned.”