Israel to Deduct Palestinian Tax Funds to Settle Electricity Debt
Israel to Deduct Palestinian Tax Funds to Settle Electricity Debt
JERUSALEM, January 12 (Reuters)—Israel intends to allocate tax revenues it gathers on behalf of the Palestinian Authority to settle the PA’s nearly 2 billion shekel ($544 million) debt owed to the state-run Israel Electric Company (IEC), as Finance Minister Bezalel Smotrich stated on Sunday.
Israel collects tax on goods entering the occupied West Bank and transfers the revenue to Ramallah as part of a longstanding agreement between the two parties.
Following the Hamas-led assault on Israel on October 7, 2023, which sparked the conflict in Gaza, Smotrich has withheld a total of 800 million shekels designated for administrative costs in Gaza.
These frozen funds are currently held in Norway. During Sunday’s cabinet meeting, he indicated that these funds would be redirected to cover the 1.9 billion shekel debt owed to the IEC.
“This action was taken after several anti-Israel incidents, including Norway’s unilateral acknowledgment of a Palestinian state,” Smotrich informed the cabinet members.
“The PA’s outstanding balance with IEC has led to elevated loans and interest rates, as well as harm to IEC’s creditworthiness, which has ultimately impacted the citizens of Israel.”
The Palestinian Finance Ministry announced that it had agreed for Norway to release part of the funds from an account held since last January, which contains 1.5 billion shekels. The ministry described the funds in the account as a punitive measure relating to the government’s financial backing for Gaza.
The ministry mentioned that as part of the arrangement, 767 million shekels of the Norwegian-held funds will be used to compensate Israeli fuel companies for fuel purchases in the upcoming weeks.
A similar amount will be allocated to resolve electricity-related debts owed by Palestinian distribution companies to the IEC.
Smotrich has resisted transferring funds to the PA, which utilizes the money for public sector wages, accusing the PA of backing the October 7 attack in Israel orchestrated by Hamas.
The PA is currently paying between 50% and 60% of salaries.
Israel also deducts amounts equivalent to the total of the so-called martyr payments, which the PA disburses to the families of individuals killed or imprisoned by Israeli authorities.
According to the Palestinian finance ministry, Israel continues to withhold 2.1 billion shekels, resulting in a total of over 3.6 billion shekels withheld as of 2024.
The ministry noted that Israel began subtracting an average of 275 million shekels monthly from its tax revenues in October 2023, reflecting the government’s monthly allocations for Gaza.
“This has intensified the financial crisis, as the government maintains direct transfers of these allocations to public servants’ accounts in Gaza,” the ministry stated.
It further added that it is collaborating with international partners to expedite the release of these funds as soon as feasible.
($1 = 3.6763 shekels)
Source : www.reuters.com
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