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.

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The declaration came in response to the U.S. Secretary of State’s insistence that the Palestinians receive all its tax revenue, although part is used to support terrorists.

By Batya Jerenberg, World Israel News

Finance Minister Bezalel Smotrich told U.S. Secretary of State Antony Blinken Tuesday that he refuses to send funds to the Palestinian Authority (PA) due to its financial support of terrorists.

“We will not transfer a shekel to the Palestinian Authority that will go to the families of the Nazis in Gaza,” Smotrich said.

Although the Islamist Hamas group overthrew the PA in the Gaza Strip in 2007, Ramallah still pays the salaries of many public employees there, as well as part of the utility bills.

Smotrich was responding to Blinken’s statement during his meeting with top Israeli government members, that Israel should hand over all the tax income it collects on behalf of the PA.

After Israel declared war on Hamas following the terror organization’s invasion and slaughter of 1,200 people three months ago, Smotrich had withheld the portion sent to Gaza. In accordance with the Israeli anti-pay-for-slay law, he also withheld the sum that the PA pays to jailed Palestinians on a sliding scale, depending on how many Israelis they killed or wounded in terror attacks.

Despite being in financial straits, the PA refused to accept the partial amount, saying it was all or nothing.

The U.S. wants Ramallah to be economically stable, because it wants the PA to run the Gaza Strip after the war, as part of the two-state solution the Biden administration still supports, although it admits the PA, widely considered corrupt by its own citizens and a terror-supporter by Israel, must first be “revitalized.”

Prime Minister Benjamin Netanyahu has rejected the idea out of hand, pointing to its officials’ silence or outright praise over the October 7, 2023 massacre in which Hamas, as well as Palestinian Islamic Jihad and even ordinary Gazans committed such atrocities as burning families alive, beheading infants and raping many women and girls before murdering them.

Smotrich also pushed back against Blinken’s reiteration that “the US unequivocally rejects any proposals advocating for the resettlement of Palestinians outside of Gaza,” referring to an idea that the finance minister champions, along with many others in the nationalist-religious parties in the coalition.

“We will work to allow the opening of the gates of Gaza for the voluntary immigration of refugees as the international community did for the refugees from Syria and Ukraine,” Smotrich declared, in a reminder that the millions who fled war in those two countries were welcomed, mainly in Europe, when they escaped.

Netanyahu told Blinken that resettlement of Gazans elsewhere, even out of their own free will, is not official Israeli policy even if part of his coalition is in favor of it.

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The Palestinians are refusing to bring in new blood to change its corrupt image or to accept the reduced funds Israel transferred to its coffers.

By Batya Jerenberg, World Israel News

The United States is facing numerous obstacles to implementing its vision of having the Palestinian Authority (PA) retake control of the Gaza Strip on “the day after” the Israel-Hamas war, not the least of which are the PA’s demands for money and statehood in return.

According to a Monday report in The Washington Post citing an anonymous White House official, people from the president’s team have been discussing the possibility with the Palestinians of having a “new government and some fresh blood joining government ranks alongside and under [President Mahmoud] Abbas.”

The PA is resisting the thought even while it knows it has been deeply unpopular in its territory for years, with the situation only growing worse since the war began October 7.

Abbas adviser and Fatah central committee member Sabri Saidam called the American requests part of a colonizer’s thought patterns.

“It’s always this colonizing mentality, whereby, ‘We decide your leadership, we are the ones basically designing your strategy for the day after, we tell you how to live, we tell you how to breathe, and we tell you how to run your land,’” he said.

Meanwhile, a full 88% of Palestinians in Judea and Samaria want Abbas to resign, while Hamas is looked upon more and more favorably, with a 44% approval rate according to a recent Palestinian poll.

Palestinian officials, according to the report, would only acquiesce if their personnel changes are tied to a well-defined “political horizon” for statehood.

While the Biden administration has made it very clear that it supports the “two-state solution,” Prime Minister Benjamin Netanyahu has made it equally clear that he could not countenance such a “mistake,” as he called it, since it would reward an entity that he has blamed for fomenting terror against Israel ever since the Oslo Accords were signed 30 years ago, creating the Palestinian Authority.

There is also a financial side to the equation, as the PA is on the economic ropes.

Finance Minister Bezalel Smotrich (Religious Zionists) had begun blocking already in January parts of payments of tax revenues on Palestinian imports/exports and those collected by Israeli employers on behalf of Palestinian employees that are transferred monthly to the PA due to its support for terrorists. (Israeli law demands that whatever amount the PA pays those imprisoned for attacking Israelis must be withheld from the tax revenues.)

Three weeks into the war, in early November, when the next transfer was due, Israel in addition withheld the amount that the PA pays to some Hamas government employees in Gaza, which it has done regularly even after Hamas overthrew its rule there in 2007. The PA also pays some of Gaza’s electricity bills.

National Security Adviser Jake Sullivan unsuccessfully tried to broker a compromise wherein Israel would check that the recipients weren’t combatants and had nothing to do with the October 7 invasion, in which civilians did participate as part of an impromptu “second wave,” murdering residents and looting the Jewish communities on their border. Smotrich’s response had been that “not one shekel” would go to the “Hamas Nazis” or to families of terrorists imprisoned in Israel.

The PA then refused to accept the funds that Israel was willing to transfer – some $113 million – if it was not going to get the full amount owed it, which has reportedly added up by now to about $140 million.

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Accounting measures, drop in gas tax boost Palestinian Authority coffers.

By Ariel Kahane, JNS

Israel recently slashed the gasoline tax it had been collecting from the Palestinian Authority by 50% as well as taken other measures to ease the financial situation in Ramallah.

The 1994 Protocol on Economic Relations (aka the Paris Protocol) between Israel and the PLO stipulates a 3% rate but Israel has recently decided to collect only 1.5%, as shown in a recent document signed by the Defense Ministry’s Coordinator for Government Activities in the Territories office several days ago. This will save some 80 million shekels ($21 million) for the Palestinian Authority on an annual basis.

Other measures that Israel has taken to help the Palestinians financially since the start of 2023 add up to some 270 million shekels ($71 million). This includes more transfers of taxes collected on behalf of the P.A., amounting to a major increase compared to about half a million shekels only three years ago. This, despite many of the goods ostensibly being sent to the P.A. never making it there because of a fraudulent ploy by importers.

Other financial measures have totaled some 350 million shekels ($92 million) since the new Netanyahu government was sworn in.

The Biden administration has been pressuring Israel to increase the aid to the Palestinians’ economy, saying that the P.A. is on the verge of collapse. But the Israeli willingness to play along despite P.A. leader Mahmoud Abbas continuing to pay terrorists has outraged some members of Congress who also say that the president’s increase of aid to the Palestinians violates U.S. law (and specifically the Taylor Force Act (2018), which prohibits funding to the Palestinians so long as the “pay-for-slay” policy continues).

As part of the effort to promote normalization with Saudi Arabia, the U.S. has placed immense pressure on Israel to make it take “steps toward bolstering the P.A.,” which include letting Riyadh send funds to Ramallah. However, there are ways being explored to try to ensure these do not make it to terrorists’ hands.

Originally published by Israel Hayom.

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According to Israeli law, the government is supposed to withhold an amount equal to the financial support the Palestinian Authority gives jailed terrorists and their families.

By Batya Jerenberg, World Israel News

Finance Minister Bezalel Smotrich announced Wednesday that the government was dealing an extra financial blow to the Palestinian Authority (PA) due to its direct support of terrorism.

“For the first time ever, I signed a double offset of terror money that the PA transfers to terrorists’ families,” he said. “We have deducted 100 million shekels instead of 50 million up until now.”

“Furthermore,” Smotrich added, “we deducted an additional NIS 200,000 that will be transferred as compensation to the families of terror victims, in accordance with the court’s ruling. The PA funds terrorists, but now the State of Israel is saying: enough is enough. The citizens of Israel will not be part of this farce.”

According to 2018’s so-called “Pay for Slay” law, the government is supposed to withhold an amount of tax money it collects for the PA from Palestinian workers in Israel that is equal to the financial support the Authority provides to jailed terrorists and the families of those killed in attempted or actual attacks.

The PA pays hundreds of millions of shekels each year on a sliding scale, with those committing the most heinous crimes receiving the highest salaries. The PA consistently vows that it will never stop the payments no matter what Israel does, even though the tax revenue is a vast part of its budget.

Israeli administrations have not been consistent in applying the law, and even when money is withheld it is often provided through other channels. The reference to the court ruling

On Tuesday, Smotrich flatly rejected a Channel 12 report that the Finance Ministry had executed the latest transfer of tax money prior to the just-concluded visit of U.S. Secretary of State Antony Blinken to Israel.

“It is a complete lie,” he told Makor Rishon, the national-religious news site. Moreover, he said, his office is planning a whole series of sanctions against the PA following the recent escalation of terror activity in Judea and Samaria which the Authority is not only not stopping, as per its obligation under the Oslo Accords, but actively encouraging.

Smotrich’s announcement comes on the heels of the successful first reading of a Knesset bill Monday to strip Israeli citizenship or residency permits from anyone convicted of a terror offense who is paid a salary by the PA. Smotrich had tweeted about the law that the move was “the most correct and ethical thing. It’s simply a matter of common sense. And of course, it is also deterrent and joins our toolbox in the fight against terrorism.”

The bill must undergo two more readings in the Knesset in order to become law. The chances of it passing seem high, as in the first vote many Opposition MKs supported it as well, with the final tally being 89-8.

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The Palestinians had earlier announced a resumption of security coordination with Israel.

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Hamas spokesman Hazem Qassem demands the PA “immediately reverse this political sin.”

By Paul Shindman, World Israel News

The Hamas and Palestinian Islamic Jihad terror groups slammed the Palestinian Authority for renewing security coordination with Israel, with Hamas saying the PA should “abandon the betting on Biden,” the Almanat Arab news website reported Wednesday.

In separate statements, Hamas and Islamic Jihad called on the PA leadership to immediately withdraw the decision announced Tuesday that owing to President Donald Trump apparently losing the U.S. election, the Palestinian Authority was renewing its ties with the Israeli government that it had cut off earlier this year.

The PA stopped security coordination earlier this year and refused to accept hundreds of millions in tax money transfers due to Israeli plans to apply sovereignty over settlements in Judea and Samaria. Those plans where shelved in favor of Israel signing peace treaties with the United Arab Emirates and Bahrain, with the Palestinians saying the Gulf Arab nations had stabbed them in the back by making a separate peace agreement with Israel.

In a statement, Hamas said the PA decision to renew ties with Israel “gives justification to the Arab normalization camp, which it had always condemned and rejects,” and called on the Authority to “abandon the betting on [U.S. president-elect Joe] Biden.”

Hamas spokesman Hazem Qassem tweeted that the PA decision “is a disregard for Palestinian public opinion” and demanded the PA “immediately reverse this political sin.”

Before the election, Palestinian officials talked with the Biden camp. According to Palestinian sources, Biden promised to reverse some of President Trump’s decisions, which included closing the Palestine Liberation Organization office in Washington in 2018, merging the U.S. consulate in eastern Jerusalem with the American embassy in Jerusalem, and cutting financial aid to the Palestinian Authority and the United Nations Relief and Works Agency (UNRWA).

The Islamic Jihad Movement called the PA decision a “coup against all national partnership endeavors and an alliance with the occupation,” saying “the continuation of the losing bet on the United States opens the way for passing plots to liquidate the Palestinian cause.”

Although the PA claimed it stopped engaging in security coordination with Israel six months ago, both Israeli and Palestinian security sources estimated some cooperation had continued. A major portion of that cooperation involves PA and Israeli security forces following Hamas and Islamic Jihad activities in Judea and Samaria to prevent terror attacks and at the same time ensure security for the PA itself from the two terror groups.

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Victims of Palestinian terror petition Supreme Court to order the government to comply with the law and stop transferring pay-for-slay money to the Palestinian Authority.

By Paul Shindman, World Israel News

Several organizations, including the bereaved families of terror victims, filed a petition with the Supreme Court demanding that the justices order Prime Minister Benjamin Netanyahu’s government to comply with a law forcing Israel to block the transfer of tax money the Palestinians use to reward terrorism, Channel 20 reported Tuesday.

According to the law enacted two years ago, the government must offset annually from the funds transferred to the Palestinian Authority (PA) the amount that the PA pays to terrorists and their families. PA policy is to pay stipends to any Palestinian killed while committing a terrorist attack against Israelis as well as those who are caught, convicted and serving prison terms for attacking Israelis.

Israel had planned to lend the PA 800 million shekels ($233 million), but the petition filed by attorney Yitzhak Bam calls on the Supreme Court to order the Defense Ministry to provide a detailed accounting of the data on the total funds paid by the PA in terrorism last year. The petitioners also want the court to instruct the government to act in accordance with the law and approve the deduction of the amount of money that is transferred to the PA.

Bam stated that the government’s delay in deducting the funds is not an option.

“This is not at the discretion of the defense minister or a committee, and in their failure to bring the report to the approval and they are unlawfully thwarting the implementation of the Knesset’s law,” Bam said.

Palestinian Media Watch, an organization that tracks what the Palestinians are doing and monitors their statements in Arabic, was one of forces behind the Israeli law that cuts money the Palestinians pay to reward terrorists.

“The PA has already paid the two murderers of Rachel Weiss and her three toddlers at least $414,516/€368,837 (each!)and continues to pay them a monthly salary of $3,487/€3,103 SIMPLY BECAUSE THEY MURDERED JEWS!” tweeted Maurice Hirsch, head of Legal Strategies at PMW.

Weiss and her children Netanel, 3, Rephael, 2, and Ephraim, 9 1/2 months were murdered in 1988 when the intercity bus they were traveling in was firebombed by Palestinians as it drove by Jericho. IDF soldier David Delarosa, who was severely burned trying to rescue the mother and children from the burning bus, died from his wounds shortly afterwards.

Last week the PA honored one of the terrorists who murdered Weiss and her children with a video on official PA TV praising terrorist Juma Adam, who is now 51 years old. However, the short video shows the pictures of several terrorists, including Adam, when they were children with the caption “our prisoners” on the screen, and ends with the slogan “freedom for our prisoners.” The short bio shown of Juma Adam only says he was “arrested” but does not reveal that he murdered a mother and three young children.

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One of the key issues is the large debt which the PA owes the Israel Electric Company.

By World Israel News Staff

With prevailing uncertainty over the economic future of the Palestinian Authority (PA), the authority’s finance minister Shukri Bishara reportedly is visiting Israel Tuesday to hold talks with Israeli officials and other economic figures in the Jewish State.

One of the key meetings, according to Israeli public broadcaster Kan, is with the director-general of the Israel Finance Ministry, centered around a large debt which the PA owes the Israel Electric Company. There had been a reported plan under the terms of which Israel would deduct the half-billion shekel electricity debt from the tax revenues that Jerusalem collects for the PA and then usually transfers to the authority.

However, a dispute has erupted over the debt, hundreds of millions of shekels, incurred in supplying electricity to Arab residents of eastern Jerusalem, who live under Israeli control, Kan reports. The PA says that it should not have to foot that part of the bill.

The PA rules in Area A of Judea and Samaria and together with Israel in Area B. The self-rule authority is supposed to rule over the Gaza Strip, but the Hamas terror group carried out a coup in 2007.

Israel has been penalizing the PA  for its financial handouts to terrorists and their families by deducting the amount of terror payments from the revenue transfers. Protesting the penalty, the PA has worsened its own financial state by not only refusing to stop paying terrorists, but also by not accepting any of the reduced transfers.

In fact, it was Israel that was said to be considering a compromise in the dispute over the payment of tax revenues.

Asharq al-Awsat, a pan-Arab newspaper based in London, reported in July that Israeli Finance Minister Moshe Kahlon and Palestinian counterpart Bishara had 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 in order to make up the difference.

Multiple Israeli and Arab media reports have spoken of Palestinian efforts to end the PA’s dependence on Israel by looking for trading partners in the Arab world, in such countries as Jordan and Iraq.

“Palestinian Prime Minister Mohammad Shtayyeh visited Iraq on July 15 to discuss importing Iraqi fuel. This falls within the PA’s quest for gradual economic disengagement from Israel,” reported Al Monitor, a news outlet covering the Middle East, on Thursday.

“On June 7, on the sidelines of the Jordanian-Palestinian Higher Committee meetings in Amman, ‘Palestine’ and Jordan signed three memoranda of understanding in the fields of energy, health, and transport. The memoranda included an energy pact allowing Palestine to refine any oil obtained that may be imported from Iraq in Jordan,” said the Al Monitor report.

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