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Palestinian Authority to accept NIS 2 billion in fuel tax from Israel

The Palestinian Authority has agreed to accept approximately NIS 2 billion in fuel tax money from Israel, a move that alleviates some financial pressure but falls short of resolving the PA’s financial crisis.

The PA has been on the verge of financial collapse this year after it protested Israel’s decision to withhold a portion of the tax revenues it transfers. Israel this year decided to deduct from those transfer the same of money that the PA gives monthly to terrorists and their family members.

In response to that decision the PA has refused to accept any of the tax revenues.

PA Prime Minister Mohammed Shtayyeh said on Thursday that it was too early to talk about an end to the crisis with Israel surrounding the deduction of payments to families of security prisoners and “martyrs” from tax revenues Israel collects each month on behalf of the Palestinians.

Shtayyeh confirmed that the PA and Israel have reached “understandings” on the fuel tax.” He said that in accordance with the understandings, the PA will start importing fuel without the tax.” 

PA Minister for Civil Affairs, Hussein al-Sheikh, announced that the PA has fuel tax (dubbed the “blue tax”) that were deducted by Israel for the past seven months.

The recovery of the funds, he said, “means the end of the oil tax crisis between the Palestinian Authority and Israel after painstaking negotiations.”

“The Palestinian Authority started importing tax-free fuel -retroactively for the past seven months, but this does not mean that the financial crisis is over,” al-Sheikh said.

He cautioned, however, that the move does not signal an end to the financial crisis in the PA. “We still have billions that are being held by Israel,” he said.

An Israeli official said that as part of the agreement  the PA would start to pay its debt to the electric company. The spokesperson added that the overall issues of the restoration of a normal transfer of tax fees from Israel to the PA has yet to be resolved.

Talks on this matter are still ongoing, the official said. The money is not due to be transferred until Sunday and there are some details with regard to the transfer that yet to be decided on, the official added.

Shtayyeh repeated his strategy of “gradual disengagement” from Israel and pointed out that the PA has already stopped medical referrals to Israel and was seeking to strengthen its relations with Jordan and Iraq. “We will import oil from Iraq because the monthly bill for Palestinian fuel is 650 million shekels,” he said. “We consume three million liters of fuel per day. If we find an alternative, we will break away from the occupation.”

The PA premier also announced that his government will pay its employees 60% of their August salary plus the 50% that remained unpaid since February, when the financial crisis erupted in the PA after Israel began deducting the payments to the families of the prisoners and “martyrs.” Since February, PA employees have been receiving 50% t0 60% of their salaries.

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