Israel looking for way to pay PA while still withholding taxes over terror payments, report says

Israel has been penalizing the PA for its financial handouts to terrorists. But now it’s looking for a way to replenish PA coffers for fear of a financial crisis, a report says. 

By World Israel News Staff

Israel reportedly is considering a compromise in the dispute with the Palestinian Authority (PA) over the payment of tax revenues.

Israel, which collects taxes for the PA under a 1994 agreement, has been penalizing it for its financial handouts to terrorists and their families. Starting this year, Israel is deducting the amount of the terror payments from the revenue transfers.

In protest, the PA refused all tax payments from Israel, risking economic crisis in the areas it controls.

However, Asharq al-Awsat, a pan-Arab newspaper based in London, reported on Friday that Israeli Finance Minister Moshe Kahlon and Palestinian counterpart Shokri Bshara have discussed a plan under which Israel would continue to make the terror deduction from the revenue transfers, but would also exempt the PA from paying an excise tax on fuel shipments from Israel.

Kahlon promised to consider the suggestion with Prime Minister Benjamin Netanyahu and the PA minister said he would take the matter up with his leadership, according to the Arabic paper.

“A high-ranking official in the Israeli government said that this development came to prevent the economic collapse of the PA,” says the pan-Arab newspaper.

Israel fears that the PA’s refusal to accept tax payments will lead to its financial collapse, sparking unrest in Judea and Samaria. It’s a concern shared by Jordan, which fears violence will spill across its borders as well.

However, not all agree that the PA faces imminent crisis. “I don’t believe the desperate cries over the collapse of the authority,” Yossi Kuperwassaer, a former senior IDF intelligence officer and senior researcher at the Jerusalem Center for Public Affairs, told Israel Hayom.

The PA did receive some help from Qatar, which agreed to provide the PA with $480 million – $50 million as a grant, and $250 million as a loan.

The PA started 2019 with a budget deficit of 3 billion shekels.

Despite the PA’s financial woes, it has increased payments to terrorists  by 11.8% in 2019, says Palestinian Media Watch, an Israeli watchdog group.

The U.S. has also passed a law to bar aid to the Palestinians as long as the stipends to terrorists and their families continue.