Israel’s freezing of Palestinian tax funds “collective punishment”

Palestinians protest the siege on Gaza at Erez checkpoint in the northern Gaza Strip, February 2018.

Yasser Qudih APA images

Israel’s freezing of millions of dollars in Palestinian tax revenue will cause the dire situation in Gaza to deteriorate even further, Al Mezan, a human rights group in the territory, warned on Monday.

Thousands of civil servants in the coastal enclave, its population of two million plunged into poverty after more than a decade of economic blockade, have already had to contend with salary cuts and late payments due to “discrimination” by the Palestinian Authority in the West Bank.

Now Israel is planning to withhold some $138 million in taxes it collects on behalf of the PA as a form of sanctions over stipends to political prisoners.

The freezing of tax fund transfers will be a “dangerous contribution to the deterioration of humanitarian and economic conditions,” according to Al Mezan.

Israel in “sole control” over borders

Legislation passed last year allows Israel to deduct payments made to Palestinian prisoners and their families from Palestinian Authority tax revenue, which Israel controls.

Israel has intermittently frozen tax transfers to the Palestinian Authority since the Oslo accords were signed 25 years ago.

Israel’s withholding of Palestinian tax revenue is a violation of Israel’s obligations under the Oslo accords Paris Protocol, Al Mezan stated.

Under that protocol Israel collects taxes on behalf of the Palestinian Authority, giving the military occupier “sole control over the external borders and collection of import taxes and VAT,” as described by the human rights group B’Tselem.

The customs union framework of the Paris Protocol was implemented because Israel “did not want to establish an economic border with the Palestinian Authority, an act that would give a clear flavor of sovereignty,” B’Tselem adds.

The Palestinian Authority estimates that the West Bank and Gaza economy loses at least $350 million per year due to Israel’s implementation of the Paris Protocol.

The Palestinian economy has lost $540 million in revenue since 2006 due to administrative fees imposed by Israel alone, according to the PA.

Last year the PA demanded $360 million in unpaid taxes from businesses operating in so-called Area C – the 60 percent of the West Bank under full Israeli military control.

The World Bank acknowledged in 2016 that the PA “suffers from substantial revenue losses under the current revenue sharing arrangements” amounting to $285 million, or 2.2 percent of the Palestinian GDP.

Israel moreover treats the occupied West Bank and Gaza Strip as captive markets for its own products including food and pharmaceuticals, thus generating immense revenue from near-monopoly access to Palestinian markets.

Collective punishment

Sanctioning Palestinian tax revenue “is tantamount to collective punishment prohibited under international law,” Al Mezan stated.

Stipends to Palestinian prisoners “are considered a form of social security for families that lost their main breadwinner,” the rights group added.

The tax revenue freeze is the latest financial blow to Palestinians living in the occupied West Bank and Gaza Strip and in refugee camps in Syria, Jordan and Lebanon.

Last year, the Trump administration in Washington slashed $300 million in aid to the already under-funded UNRWA, the United Nations agency for Palestine refugees, as well as $200 million in bilateral aid to the Palestinians.

New legislation signed into law by Trump last October effectively disqualifies the Palestinian Authority from receiving US funding “unless it agrees to pay court judgments of sometimes up to hundreds of millions of dollars on behalf of American victims of Palestinian attacks,” as reported by the Associated Press.

Aid as leverage

President Donald Trump has admitted to using humanitarian aid as political leverage to advance his administration’s Israeli-Palestinian “peace deal.”

Israeli media have reported that Trump’s long-delayed plan – now shelved until after Israel’s general election in early April – will include the annexation of Israel’s major settlement blocs in the West Bank.

The Israeli government, under the leadership of Benjamin Netanyahu, who is running for re-election, plans to significantly expand settlements in the West Bank, including outposts built without formal authorization.

All Israeli settlements in the West Bank, including East Jerusalem, violate international law, which prohibits an occupying power from transferring its civilian population to the territory it occupies.

In 2016 the UN Security Council reaffirmed that Israeli settlement-building in the occupied West Bank “has no legal validity and constitutes a flagrant violation under international law.”


Maureen Clare Murphy

Maureen Clare Murphy's picture

Maureen Clare Murphy is senior editor of The Electronic Intifada.