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PA Demands a Halt to Israel’s Deduction of Tax Revenues

PA Demands a Halt to Israel’s Deduction of Tax Revenues

Friday, 23 September, 2022 - 08:45
Part of the pledging conference. (WAFA)

The Palestinian Authority put forward two main demands during the United Nations Relief and Works Agency for Palestine Refugees in the Near East’s (UNRWA) pledging conference in New York on Thursday.


It called on Israel to halt deductions from tax revenues it collects on behalf of the Palestinians and underlined the need to amend the Paris Economic Protocol.


Palestinian Finance Minister Shukri Bishara underscored the importance of the international community’s immediate intervention to pressure Israel to return the full and undiminished Palestinian financial rights and stop its piracy of tax revenues, in violation of international law and bilateral agreements.


He made the remarks on the sidelines of the Ad Hoc Liaison Committee (AHLC) meeting in New York.


The PA, which presented many financial and legal issues, hopes to persuade the donor countries to pump money into its financially ailing treasury.


The Authority is suffering from its worst financial crisis due to Israel’s continued deduction of funds from Palestinian tax revenues, the COVID-19 pandemic, and the decline in foreign aid.


It has been paying partial salaries to most of its employees since early 2022 due to this outstanding crisis.


It launched financial reforms, including a plan to send thousands of employees to retirement in order to reduce the wage bill.


The PA is supposed to launch next month a plan that allows employees to retire voluntarily, to be followed in a second stage by a plan for compulsory retirement.


Bishara also reviewed the performance of the public finances in 2022’s budget.


He underlined the significant development in the growth of revenues, noting that the total revenues amounted to $3.4 billion during the period from 2021, up 21%, due to boosting tax collection procedures, increased tax compliance, and the Ministry’s approach to improve revenues and reduce expenditures.


Meanwhile, he pointed to the relative decrease in expenditures between January until August 2022 by 2%, compared to the same period in 2021.


The decrease was concentrated in operating expenses, and the same period saw a 20% increase in development expenses.


The Minister expected the fiscal deficit to further decrease by late 2022, as a result of rationalizing expenditures and raising incomes.


This means that the GDP deficit ratio will be less than 2%, which is a positive indicator and much lower than the 2021 levels at 4.2%.


Bishara also mentioned the reforms to the wage bill, net lending, restructuring the health system, reducing the cost of medical referrals, as well as a plan to increase revenues and rely on Palestinian financial resources to reduce the deficit and achieve financial sustainability.


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