Palestinian Authority in crisis over Israel’s refusal to transfer tax revenue

A handout picture provided by the Palestinian Authority’s press office (PPO) shows Palestinian president Mahmud Abbas (C) chairing a meeting with security chiefs in the city of Ramallah in the occupied West Bank in 2022

Jack Khoury reports in Haaretz on 17 July 2025:

The Palestinian Authority plans to convene an emergency meeting Thursday night on the “severe, unprecedented challenges” posed by the fact that Israel still hasn’t transferred much of the tax revenue it collects on the PA’s behalf.

In a press statement, the authority said the ongoing delay in transferring the money “threatens the ability of PA institutions to continue providing vital services, pay salaries to public-sector workers and maintain economic and social stability.”

A senior Palestinian official said that negotiations are currently taking place through the European Union’s mediation with the goal of securing the transfer of around 890 million shekels ($265 million) to the PA. That would enable it to pay public-sector workers 70 percent of their salaries for the past few months.

But so far, the Israeli Finance Ministry has refused to approve the payment.  The source said that Israel has so far flatly refused to hand over the entire sum it has withheld, which is estimated at around 8 billion shekels. It has also refused to allow humanitarian aid to enter the Gaza Strip through all the border crossings rather than only some, he said.

The package now being discussed by the negotiators would include several measures to ease the situation in the West Bank, including reducing movement restrictions and halting settler attacks on Palestinians. In exchange, the EU would shelve its plan to consider sanctions on Israel.

But beyond the diplomatic aspects of the issue, there is also increasing criticism of the PA from the Palestinians themselves.

A senior official at one PA ministry said that employees of all ministries have been receiving only partial salaries, roughly 70 percent of the total, but haven’t been paid even that over the last two months. Moreover, he said, payments haven’t been made for benefits such as pension contributions and insurance.

Teachers are already threatening not to begin the new school year, he said. Employees of government ministries are also threatening to strike, and the health system is on the brink of collapse.

“The banks aren’t cooperating with the PA to pay salaries, and no real solution is visible on the horizon,” the official added. “There are only empty speeches that base the government’s policy on collecting handouts from the world.”

Prime Minister Mohammad Mustafa’s government “is losing the last remnants of its relevancy to the Palestinian street,” he continued. “The number of strikes is rising, and it’s possible that the new school year won’t begin on time.”

A Palestinian political official involved in the crisis said it seems as if the PA’s entire future rests on Finance Minister Bezalel Smotrich signing off on the tax transfer.

However, public trust in the government and the PA itself has already been severely eroded, he said, and if the situation continues like this, then barring outside intervention, everything will fall apart.

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