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Israel, PNA reach deal on frozen taxes
April 19, 2015
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RAMALLAH: Israel has agreed to transfer in full hundreds of millions of dollars in taxes collected for the Palestinian National Authority (PNA) but frozen in a row over the International Criminal Court (ICC), the Palestinian premier says.

Rami Hamdallah, in a statement from his office late on Friday, said Israel pledged at a meeting with Palestinian officials to hand over the taxes collected between December and March, amounting to almost half a billion dollars.

Israeli officials on Saturday confirmed an agreement was sealed on the taxes, while the media said the transfer of 1.8 billion shekels would take place on Monday.

Hamdallah said the PNA, once the funds are received, will firstly pay the April salaries of its 180,000 employees, who have been receiving only 60 per cent of their wages since December.

The deficit will also be paid “as soon as possible,” the prime minister said.

Palestinian President Mahmoud Abbas has initially rejected Israel’s unfreezing of the tax funds because it included a deduction to settle debts incurred by his PNA, including for unpaid utility bills.

Speaking to a gathering of Palestinians leaders, Abbas said that “There is an agreement; the money will be sent in full.”

Following international pressure, Israel agreed last month to resume the transfers and said it would pay $400 million, having deducted money it said the Palestinians owed for utilities and medical treatment.

However, Abbas said he would not accept this sum since Israel had made its deductions unilaterally.

The current agreement appears to have resolved this issue.

 “An agreement was reached to send three months’ worth of funds in full and a joint (Palestinian-Israeli) committee will discuss all the amounts that belong to us and what we owe,” Abbas said.

The UN special co-ordinator for Middle East peace efforts, Nickolay Mladenov, welcomed the deal as an important step “in the right direction.”

“Withholding these revenues for over four months has undermined the stability of the Palestinian institutions,” he said.

The Palestinians had threatened to turn to the International Criminal Court over Israel’s decision in early January to retain the taxes in retaliation for the Palestinians joining the ICC.

The monthly funds account for two-thirds of the Palestinians’ annual budget, excluding foreign aid.

Israel agreed at the start of April to release the funds after deducting debts due for electricity, water and medical services, a proposal rejected by the Palestinians who insisted on full payment.

An Israeli government official, who declined to be named, said in a statement that 1.85 billion shekels ($473 million) would be transferred after negotiations resulted in a deal.

The transfer was meant to ensure regional stability and for humanitarian considerations, the official said, but gave no further details.

Under an economic agreement signed in 1994, Israel transfers to the PNA tens of millions of dollars each month in customs duties levied on goods destined for Palestinian markets that transit through Israeli ports.

Although transfer freezes have been imposed many times, they have rarely lasted more than one or two months, except in 2006 when  Hamas won a landslide victory in Palestinian legislative polls and Israel withheld the funds for six months.

Israeli Prime Minister Benjamin Netanyahu announced after his re-election last month that the transfers would resume as a humanitarian gesture.

Palestinian officials said Israel owes the Palestinian Authority 1.8 billion shekels ($450 million) in frozen funds, but that Israel demanded to keep hundreds of millions of shekels for debt repayment.

Israel says that the Palestinians have racked up debts to Israel’s electric company in excess of 2 billion shekels ($510 million) yet Israel has continued to provide electricity out of concern for the Palestinian population.


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