PA claims Israel still withholding tax revenues

Despite recent assurances by Israel that it would resume the transfer of tax revenues to the cash-strapped Palestinian Authority, one PA official said on Monday that Israel continues to withhold the money.

In early December, Finance Minister Yuval Steinitz announced that NIS 450 million ($120 million) in tax revenues that were to be transferred to the Palestinian Authority would be used to offset PA debts to Israel. The move was widely seen at the time as a punitive measure against the Palestinians for the successful upgrade of their status at the United Nations in late November to nonmember observer state.

In December, Israel Radio reported that the Palestinian Authority owed over NIS 1 billion to Israel.

In late January, Prime Minister Benjamin Netanyahu decided that revenues collected in December would be transferred to the PA in order to help ease its serious financial difficulties. Israel used some NIS 450 million collected in November to pay off part of the PA’s debt to the Israel Electric Corporation.

However, on Monday, Ahmad al-Hilou, the Palestinian director of customs taxes and VAT, told the Palestinian Ma’an news agency that the money that was to be transferred last Thursday was still being withheld, due to what he called “political” considerations.

Israel has frozen payments to the PA in the past, most notably in November 2011, after UNESCO granted the Palestinians full membership.

Two weeks before last year’s UN vote on the Palestinians’ status, Stenitz said that Israel would not collect taxes on the Palestinians’ behalf, nor deliver the money to the PA or assist Ramallah in economic matters, if the Palestinians insisted on seeking nonmember observer state status at the UN.

Al-Hilou also told Ma’an that, next week, PA officials would meet with their Israeli counterparts to discuss the transfer of January’s tax revenues.

Despite economic leaps in the last several years, the Palestinian economy is still largely beholden to foreign aid and tax revenues collected by Israel.

Many Palestinians are striking this week to protest non-receipt of salaries, attributed to Israel’s withholding of tax revenues. West Bank teachers began their strike on Sunday, and schools were expected to remained closed throughout the week.

Health workers in the West Bank also stopped working, with hospitals and medical centers offering only emergency services.

Palestinian sources have said that workers in the public sector have not received full salaries in at least five months.