Israel to use Palestinian tax revenue to pay off electric co debt Via Reuters

Written by Steven Scheer

JERUSALEM (Reuters) – Israel plans to use the tax money it collects on behalf of the Palestinian Authority to pay the PA’s debt of about 2 million ($544 million) to Israel Electric Co (IEC), Finance Minister Bezalel Smotrich said on Sunday.

Israel collects taxes on goods passing through Israel to the occupied West Bank on behalf of the PA and transfers the money to Ramallah under a long-term arrangement between the two sides.

Since the attack led by Hamas on Israel on Oct. 7, 2023, provoked the war in Gaza, Smotrich rejected a total of 800 million shekels earmarked for administration costs in Gaza.

Those frozen funds are being held in Norway and, he said at Sunday’s cabinet meeting, will instead be used to pay a debt owed to the IEC of 1.9 billion shekels.

“This process was implemented after several actions against Israel and includes the recognition of one Norwegian state of the Palestinian state,” Smotrich told the cabinet ministers.

“The PA’s debt to the IEC resulted in higher loans and interest rates, as well as damage to the IEC’s debt, which was ultimately passed on to the citizens of Israel.”

The Palestinian Ministry of Finance said that it had agreed that Norway would release part of the money from the account held since last January for 1.5 billion shekels, calling the money in the account “a penalty measure related to the government’s financial support for Gaza”.

The ministry said that as part of the agreement, 767 million shekels of Norwegian holding funds will be paid to Israeli fuel companies for weekly fuel purchases in the coming months. The same amount will be used to pay off electricity-related debts owed to Palestinian companies that transport goods to the IEC.

Smotrich refuses to send money to the PA, which uses the money to pay public salaries. He accuses the PA of supporting the Oct. 7 In Israel led by the Islamist group Hamas, which controlled Gaza. PA currently pays 50-60% of wages.

Israel also deducts an amount equal to the sum of the so-called martyr’s fees, which the PA pays to the families of fighters and civilians killed or imprisoned by Israeli authorities.

The Palestinian Ministry of Finance said that 2.1 billion shekels were still withheld by Israel, bringing the total amount withheld to more than 3.6 billion shekels as of 2024.

It said Israel began deducting an average of 275 million shekels per month from its tax revenue in October 2023, which is equivalent to the government’s monthly allocations for Gaza.

“This has increased the financial crisis, as the government continues to transfer these allocations directly to the accounts of civil servants in Gaza,” the agency said.

It added that it is working with international partners to secure the release of these funds as soon as possible.

($1 = 3.6763 shekels)