Following the Israeli Cabinet announcement on Sunday that Israel will be deducting part of the amount that the P.A. uses to reward terrorists from taxes to be transferred to the P.A., all indications are that P.A. leader Mahmoud Abbas will refuse to accept all tax money that Israel transfers to it. This policy will lead to a grave humanitarian crisis for Palestinians.

Starting next month, Israel will deduct 502,697,000 shekels a year ($139,638,000), the amount reported exclusively by PMW that the P.A. paid in 2018 in salaries to imprisoned and released terrorists. This sum does not include the P.A.’s financial rewards to families of dead terrorists, the so-called “martyrs,” or to wounded terrorists. The deduction will be made in 12 monthly portions of approximately $11,636,500 million a month, almost 42 million shekels monthly.

In response to the cabinet’s announcement, Abbas spokesman Nabil Abu Rudeina stated that the Palestinian Authority will continue to support terrorists: “[It is] the firm position of … [Abbas] in which he affirmed that we will not accept any harm to the livelihood of our imprisoned heroes and the families of martyrs and wounded.” WAFA, official P.A. news agency, English edition, Feb. 17, 2019]

Information obtained by Palestinian Media Watch from Israel’s Ministry of Finance in response to a request based on Israel’s Freedom of Information Act shows that the taxes Israel collected and transferred to the P.A. in 2018 amounted to $2.2 billion (NIS 8 billion), an average of $186,121,569 a month (670,037,651 shekels). At the same time, P.A. payments to terrorist prisoners, released prisoners and families of dead terrorists in 2018 averaged at least $204 million a year (NIS 732 million a year), or $17 million a month (NIS 61 million), according to PMW calculations.

Earlier this month, Abbas declared that if Israel deducts a sum equal to what the P.A. spends on rewarding terrorists from next month’s transfer—an estimated $11.6 million, according to the sum announced by the Israeli Cabinet—he will refuse to accept the entire remainder (approximately $174.5 million a month) that the Palestinian population needs to keep the economy functioning:

“[P.A.] Minister of Civil Affairs Hussein Al-Sheikh said yesterday [Feb. 10, 2019] that he has conveyed an official message at the request of [PA] President Mahmoud Abbas that emphasizes that ‘He will refuse to receive the collected [tax] money if Israel deducts even one penny from it.’” [Official P.A. daily Al-Hayat Al-Jadida, Feb. 11, 2019]

Maurice Hirsch, head of legal strategies at PMW comments: “If Abbas follows through with his decision and the P.A. refuses to accept this money next month, it will conclusively confirm that Abbas and the P.A. prioritize rewarding terrorists and murderers rather than the best interests of the entire Palestinian population. Instead of accepting that Israel refuses to transfer $11.6 million/month for terror rewards, Abbas prefers to punish the entire Palestinian population by refusing $174.5 million of tax money, which would benefit all Palestinians. If Abbas maintains this decision, the entire Palestinian economic infrastructure could ground to a halt.”

As the following chart shows, at least since 2014, the taxes collected by Israel have accounted for approximately 50 percent of the P.A.’s operational budget—i.e., the P.A.’s entire budget less its debt payments. In 2018, the average monthly tax income was $186,121,569 million a month (NIS 670 million). By refusing the remainder of this sum after the sum of the terrorist salaries is deducted, Abbas is intentionally preventing his people from receiving a huge part of their annual needs:

Percentage Total taxes from Israel
in shekels**
PA operational budget
in shekels*
55% 7,336,137,702 13,316,000,000 2014
56% 7,989,738,763 14,284,000,000 2015
59% 8,779,735,807 14,762,000,000 2016
54% 8,945,199,482 16,290,000,000 2017
48% 8,040,451,812 16,599,000,000 2018

*Figures based on the annual budget published by the P.A.

**Figures based on Israeli Ministry of Finance

Why would Abbas be bringing such a financial and humanitarian crisis on the Palestinian population?

Hirsch suggests: “Firstly, it is possible that Abbas intends to try and use the tactic of impoverishing the Palestinian population to put pressure on Israel to transfer to him the money he uses for terror. Secondly, he may hope that the international community will pressure Israel to ignore its own laws. Thirdly, he may expect the international community to again subsidize the P.A. Alongside the financial leverage Abbas hopes to gain, it is also possible that he is going to use the deduction, and the ensuing self-made crisis, to spark yet another wave of terror. Whatever the motivation, Abbas has shown once again that rewarding terrorists is a high Palestinian Authority priority.”

Israel is deducting this money following the passage of a law last year mandating that Israel deduct and freeze the amount the P.A. paid to reward terror in 2018 from the tax money Israel collects for the P.A. The frozen funds would be given to the P.A. if it were to abolish its “pay for slay” policy.

Abbas could have all the money if only he would stop rewarding terror, but he refuses.

In October 2018, Abbas stated: “I say this to everyone—the salaries of our martyrs, prisoners and wounded are a red line. They [Israel] try by all means, and exert pressure by all means, and they continue to exert: “It cannot be that you will pay.” And they’ll even deduct our money that’s in their hands. They’ll deduct from it the amount that we pay to the Martyrs. We have said that this is a red line and we will not allow [it]. From 1965 until now, this matter is sacred to us. The martyrs and their families are sacred, [and so are] the wounded and the prisoners. We must pay all of them. If one penny remains in our hands it is for them and not for the living. [Official P.A. TV, Oct. 28, 2018]