Israel is considering granting the Palestinian Authority (PA) tax breaks to prevent its economic collapse, reported Israel Hayom newspaper.
The Israeli cabinet is expected to discuss the provision of economic facilities to circumvent the law of deduction of the salaries of the families of martyrs and prisoners from the funds owed to the Authority.
The PA is suffering from a large financial deficit following its rejection to receive tax revenues from Tel Aviv after authorities deducted amounts from them.
Israel Hayom confirmed that over the past few weeks, talks were held between the two sides to find a way to ease economic pressure on the PA.
The talks were approved by political officials in Tel Aviv especially that Israeli security services fear the Authority is under threat of economic collapse.
Reports claim that Israel’s Finance Ministry could waiver imposing fees of Palestine’s fuel purchases from Israel, which could save about 200 million shekels a year, thus ease the economic pressure.
However, PA sources noted that any reduction of the allowances of the families of the martyrs and prisoners is unacceptable, no matter the alternatives.
PA President Mahmoud Abbas said on Saturday the leadership will not accept the tax revenues, collected by Israel on behalf of the Palestinians if it was not paid in full.
Tel Aviv fears a potential collapse of power that could lead to chaos. Since the deduction law entered into effect, Israeli political and security apparatus are seeking ways to bypass the transfer of funds to the Palestinians without breaking the law, in a manner that does not raise criticism of public opinion.
In February, Israel began deducting about $11.5 million a month from tax revenues transferred by Israel to the Palestinians and did so continuously during 2019. The amount totaled to about $138 million, which is equivalent to the payments paid by the PA to the families of martyrs and prisoners in 2018.
The newspaper reported that Israel’s Finance Minister Moshe Kahlon, is responsible for the tax authority, however, officials at Kahlon’s office noted that the issue is purely political and the Minister acts according to the government’s decisions.
The office of the Israeli government coordinator in the Palestinian territories declined to comment on the report.
Head of the Knesset Foreign Affairs and Defense Committee, Avi Dichter, rejected reports claiming that the PA would collapse, saying he doesn’t fear this would happen.
Dichter stated that the security forces opposed the tax reduction law from the outset for fear of the collapse of the PA, but Israel cannot accept a position in which the PA cooperates with it while paying to the “saboteurs.”
The MK told Israel Hayom that “we can overcome the obstacles and monitor the amount of money received by terrorists' families. We expect that this will be done.”