US mulls asking Israel to provide PA tax funds for Trump’s Gaza plan — sources
PA official tells ToI proposal being weighed would see portion of $5 billion ‘illegally’ held by Israel transferred to Board of Peace, while equal cut would be released to Ramallah
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The US is considering asking Israel to give some tax money it is withholding from the Palestinian Authority to Donald Trump’s Board of Peace to fund the US president’s post-war plan for Gaza, five sources familiar with the matter said.
The Trump administration has not yet decided whether to make a formal request to Israel, said three of the sources, officials with knowledge of US deliberations with Israel.
The two other sources, Palestinians with knowledge of the deliberations, said that under the proposal, a portion of the tax money would go to a US-backed transitional government for Gaza and other funds to the PA if it makes reforms.
The PA puts the amount of tax being withheld at $5 billion.
A Palestinian official confirmed to The Times of Israel that the US has proposed transferring a large portion of the withheld funds to the Board of Peace in exchange for an equal cut being released to the PA.
Ramallah in the past has rejected the coopting of its funds, even for purposes that could benefit civilians in Gaza, viewing the move as a violation of its sovereignty. However, the PA is reconsidering its stance given its desperation to secure access to at least some of the money “illegally” held by Israel, the official said, pointing out that Jerusalem is violating the Oslo Accords by holding onto the funds.
It’s unclear whether the US and Israel will ultimately even seek the PA’s approval to transfer the tax revenues to the Board of Peace.
The prospect of the Palestinians’ own tax money being repurposed toward Trump’s Gaza rebuilding plan, over which their government has had no input, could further sideline the Western-backed PA even as Israel’s withholding of the funds begets a financial crisis in the West Bank.
Israel has proposed using a portion of the several billions of dollars it is holding to pay for the clearing of rubble for construction projects in Gaza, as well as to cover the cost of the controversial Gaza Humanitarian Foundation’s operations during the war, a PA official told The Times of Israel in January.
Ramallah opposes both ideas, arguing that Israel has no right to use its “stolen” funds for rebuilding what the Israel Defense Forces destroyed in the Gaza Strip during the war, the PA official asserted.
The PA exercises limited self-rule in the West Bank but has not had any sway over Gaza since it was violently ousted from the territory after a brief civil war with the Hamas terror group in 2007.
Trump’s plan for Gaza, shattered after more than two years of war, has been held up by a refusal by Hamas to lay down their weapons and by continued Israeli strikes in Gaza that have undermined an October ceasefire.
Israel says the strikes target terror operatives who endanger or attack troops in violation of the ceasefire.
‘Money held in a bank does nothing’
The Board of Peace declined to comment on whether a proposal to use Palestinian tax money was under consideration.
A Board official said it had asked all parties to leverage resources to support Trump’s rebuild plan, estimated to cost $70 billion.
“That includes the Palestinian Authority and Israel. There is no doubt that money held in a bank does nothing to further the President’s 20-Point Plan,” the official said.
That appeared to refer to the PA tax revenue that Israel has withheld from the body in a long-running dispute over payments it makes to families of Palestinian security prisoners and slain attackers — a policy that Ramallah insists it halted last year.
Israel collects taxes on imported goods on behalf of the PA and is meant to transfer the revenue under a longstanding arrangement. The PA uses the funds to pay civil servants and fund public services.
Since the beginning of the Gaza war, Israel has also been withholding the portion of the funds that the PA uses to pay employees and services in the Strip, arguing that the money is at risk of seizure by Hamas.
The sources did not say how much of the tax money Washington was considering asking Israel to transfer to the Board.
The US State Department, Israeli government and Palestinian Authority did not immediately respond to requests for comment.
The US and Israel have long pressured the PA to abolish payments to Palestinian prisoners and families of those killed by Israeli forces, arguing it encourages violence.
Palestinians consider them a form of welfare for inmates they regard as national heroes.
In response to US pressure, the PA in February 2025 said it was reforming the payment system, but the US said those changes did not go far enough. As punishment, Israel has withheld taxes it collects on the PA’s behalf, an amount that Palestinian officials say has reached $5 billion — well over half of the PA’s annual budget.
That has set off a financial crisis in the West Bank, with the PA slashing salaries of thousands of civil servants.
Israel accepted a US invitation to join the Board of Peace. The PA was not invited.
Under Trump’s plan, a group of Palestinian technocrats dubbed the National Committee for the Administration of Gaza would take control of Gaza from Hamas as the militants lay down their weapons.
Nickolay Mladenov, Trump’s Board of Peace envoy for Gaza, said during a press conference in Jerusalem on Wednesday that reconstruction planning was in advanced stages.
“We’re doing it sector by sector. We’re costing things. We’re coordinating with donors and we’re ready to begin in earnest once the conditions allow it,” Mladenov said, without mentioning the tax issue.
The Times of Israel Community.