The security cabinet on Sunday voted to withhold $43 million of tax funds from the Palestinian Authority over its "pay-for-slay" policy that has long been condemned by Israel and the US as a practice that encourages violence.
The sum represents funds that Israel says the PA has used to pay the families of Palestinian terrorists who have been jailed or killed as a result of attacking Israelis.
Follow Israel Hayom on Facebook and Twitter
Israel maintains that the so-called "Martyrs Fund" rewards violence. The Palestinians say the payments are needed to help vulnerable families affected by the conflict with Israel.
Under past agreements, Israel collects customs and other taxes on behalf of the Palestinians and transfers the money to the Palestinian Authority. These monthly transfers, about $170 million, are a key source of funding for the budget of the PA, which administers parts of Judea and Samaria.
Israel last year passed a law deducting parts of these transfers that it said were supporting terrorists' families. Sunday's decision was a continuation of that policy.
In February, after Israel withheld $140 million, the PA said it would reject all transfers to protest the Israeli policy. But six months later, with the Palestinian Authority in a deep financial crisis, the sides worked out a deal to resume most of the transfers.
PA official Hanan Ashrawi denounced the latest Israeli move, calling it a "blatant act of theft and political extortion."
Prime Minister Benjamin Netanyahu's office declined to comment.
The total amount of money withheld now equals some 6.8% of tax funds due to the PA. The full remittances make up around half of the budget of the PA.
"For too long, we allowed the PA to pay salaries to terrorists. That party is over," Deputy Defense Minister Avi Dichter said on Twitter.
The United States passed legislation last year to sharply reduce aid to the PA unless it stopped the stipends. The measure, known as the Taylor Force Act, was named after a 29-year-old American military veteran fatally stabbed by a Palestinian while visiting Israel in 2016.
Washington has further slashed hundreds of millions of dollars to humanitarian organizations and UN agencies which aid the Palestinians as it seeks to pressure PA President Mahmoud Abbas to come back to the negotiating table.
