Israel withholds PA tax funds over terror financing

Israel is withholding millions in tax transfers, citing terror-linked payments by the PA.

By World Israel News Staff

Israel’s Finance Ministry announced Monday that it has withheld hundreds of millions of shekels in tax revenues collected on behalf of the Palestinian Authority (PA), citing the entity’s continued support for terrorism and its outstanding debts to Israeli service providers.

Under longstanding arrangements, Israel collects certain taxes from Palestinian residents and transfers the funds to the PA. However, Finance Minister Bezalel Smotrich said the government would halt a significant portion of these transfers due to the PA’s misuse of funds, specifically to support terrorism.

In a media statement, Smotrich blasted the PA for using public money to support terrorism, including its “pay-for-slay” policy, which provides generous monthly stipends to convicted terrorists and their families. He also pointed to debts owed by the PA to Israeli institutions such as the Israel Electric Company, which supplies essential services to Palestinian areas.

“Not a single shekel intended for incitement to terrorism will be transferred,” Smotrich said in a press release. “Those who choose to fight the State of Israel in the international arena and support terrorism will pay the price.”

According to the Finance Ministry, approximately 590 million shekels (about $200 million) out of the roughly 740 million shekels (about $250 million) collected in April will be withheld.

The move comes amid mounting financial pressure on the PA. A report by the Palestinian outlet Ra’i Al Youm indicated that officials in Ramallah are increasingly concerned about the decision and its economic impact.

The report said PA officials are pleading with the Trump administration, requesting U.S. intervention to pressure Israel into releasing the funds. Palestinian officials reportedly warned that the shortfall could prevent the full payment of salaries to senior government and security personnel.

The PA’s stipends for convicted terrorists exceed average wages in PA-controlled areas.

Reports following the October 2025 hostage exchange and ceasefire indicated that several released prisoners had earned more than one million shekels (approximately $335,000) from the PA during their incarceration.