Report: US pressuring Israel to hand PA millions in withheld tax revenue

The United States has demanded that the Israeli government transfer to the Palestinian Authority tax revenue it has been withholding from it, the Kan public broadcaster reports.

The Finance Ministry has confirmed that it has decided not to transfer tax revenues this month, with various Hebrew media reports putting the withheld sum at NIS 170-200 million ($46-54 million).

The Palestinian Authority said earlier this week that it would only pay public sector employees 50% of their March salaries, after Israel withheld the transfer due for the month of April, and that the arrears will be paid once the financial situation allows.

According to Kan, senior US officials have recently employed heavy pressure on top Israeli officials to transfer the money, warning that failure to do so would “cause an acute economic crisis” in the West Bank and could inflame tensions. The tension is increasing ahead of US National Security Adviser Jake Sullivan’s visit to Israel.

Finance Minister Bezalel Smotrich’s move is in protest of PA efforts “fighting against the State of Israel,” an apparent reference to reports that Ramallah has been pushing for the International Criminal Court to issue arrest warrants for top Israeli officials for alleged breaches of international law in Gaza during the ongoing war against Hamas, as well as leading “unilateral” moves to upgrade its status in the United Nations.

Israel collects hundreds of millions of shekels in Palestinian tax revenue, which Smotrich held up earlier in the war over concerns that the portion of the funds that Ramallah uses to pay for services and employees in Gaza — roughly NIS 260 million ($73 million) monthly — could wind up in the hands of Hamas.

Although Hamas wrested control of Gaza from the rival Fatah faction in 2007, the Palestinian Authority, which is dominated by Fatah, continues to fund some health and education services in the enclave.

An agreement was eventually reached in February for Israel to transfer the payments to the PA via Norway to ensure no money is diverted.

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