Israel has recently slashed the gasoline tax it had been collecting from the Palestinian Authority by 50% as well as taken other measures to ease the financial situation in Ramallah, Israel Hayom has learned. The 1994 economic accords between Israel and the Palestinians stipulate a 3% rate but Israel has recently decided to collect only half the amount, at 1.5%, as shown in a recent document signed by the IDF Coordinator for Government Activities in the Territories office several days ago. This will save some NIS 80 million ($20 million) for the PA on an annual basis. 

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Other measures that Israel has taken to help the Palestinians financially since the start of 2023 add up to some NIS 270 million ($70 million). This includes more transfers of taxes collected on behalf of the PA, amounting to a major upgrade compared to about half a million shekels only three years ago. This, despite many of the goods ostensibly being sent to the PA never making it there because of a fraudulent ploy by importers. 

Video: Troops arrest terrorist behind Mount Hebron attack / Credit: Israel Police

Other financial measures have totaled some NIS 350 million ($90 million) since the new government has been sworn in. 

The Biden administration has been pressuring Israel to increase the aid to the Palestinians' economy, saying that the PA is on the verge of collapse. But the Israeli willingness to play along despite PA leader Mahmoud Abbas continuing to pay terrorists has outraged some US congress members, with some saying that the president's increase of aid to the Palestinians runs against US law (and specifically the Taylor Force Act, which prohibits funding to the Palestinians so long as the "pay-for-slay" policy continues). 

Israel Hayom has also learned that as part of the efforts to bolster normalization with Saudi Arabia, the US has placed immense pressure on Israel to make it take "steps toward bolstering the PA," which include letting Riyadh send funds to Ramallah. However, there are ways being explored to ensure these do not make it to terrorists' hands.

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The Israeli government will soon face a decision on whether to deduct 926 million shekels ($282 million) from the tax money it collects on behalf of the Palestinian Authority, the equivalent of the total it paid in stipends to terrorists and their families in 2020.

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The Palestinian Authority routinely spends hundreds of millions of dollars on payments to terrorists imprisoned in Israel and to the families of terrorists killed while carrying out attacks against Israel. The PA's "pay-for-slay" policy is a widely condemned practice that takes a growing cut of Ramallah's budget – funded by donor countries in the West and the Arab world – every year.

Defense Minister Benny Gantz submitted a report to the cabinet on Ramallah's highly controversial policy last year, but the matter has not been discussed yet. The new Diplomatic-Security Cabinet is set to convene Sunday for the first time since the swearing-in of the new government, but the Prime Minister's Office declined to comment whether the matter would be discussed at the session.

According to the Palestinian Media Watch NGO, the PA transferred NIS 750 million ($229 million) to terrorists and their families in 2020. Another NIS 176 million ($53 million) was used as stipends in December 2019 but was not included in the yearly report at the time by then-Defense Minister Naftali Bennett.

Israel, which collects taxes on behalf of the PA as part of a mechanism outlined in the 1993 Oslo Accords and transfers the funds to Ramallah monthly, began deducting the sums the PA uses to pay terrorists in July 2018, after the Knesset passed a law to that effect, in an effort to discourage the Palestinian practice.

However, due to various considerations, not every month did the government follow through on the law. In 2019, the Netanyahu administration decided not to deduct NIS 610 million ($106 million) from the taxes collected for the PA, the amount it used to pay terrorists between January and November that year.

Attorney Itzhak Bam has recently filed a petition with the High Court of Justice to require the government to adhere to the law. The petitioners are the "Choose Life" forum, which works with bereaved families, and Herzl and Merav Hajaj, whose daughter Lt. Shir Hajaj was killed along with three other Israelis by a Palestinian truck driver who deliberately rammed into a group of IDF soldiers in Jerusalem in 2017.

Maurice Hirsch of Palestinian Media Watch, said that the law is "meant to punish the PA for paying terrorists who killed Israelis. When the Israeli government doesn't follow the 'pay-for-slay' law, it sends a clear message: that it is letting the matter slide, and the authority then continues to use the money to fund killing more Jews."

The cabinet said in a statement that it has not yet scheduled a time to discuss the matter "due to the circumstances of the time, including the change of government."

"Pay-for-slay" has earned the PA scathing international criticism, but Palestinian Authority President Mahmoud  Abbas has vowed to keep up terrorists' payments, even it if bankrupts the PA.

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The Bank of Palestine has recently discontinued its work with the accounts of terrorists who receive benefits from the Palestinian Authority.

According to official statements from the terrorist organizations, the bank has informed terrorists and their family members that they must withdraw all funds and close their accounts.

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The decision stems from the warning the Bank of Palestine received from the Palestinian Media Watch, a non-profit Israeli institute that researches the Palestinian society.

The institute warned the bank about a year ago that according to the 2016 Counter-Terrorism Law, financial entities involved in the pay for slay system will be viewed as supporting terrorists – and will therefore be exposed to enormous legal and economic risks.

Israel's Military Advocate General had been delaying the application of the Counter-Terrorism Law in Judea and Samaria for years. Only after the murder of 17-year-old Rina Shnerb and following a demand by Palestinian Media Watch attorney Maurice Hirsch, who also represents the family, was Israel forced to clarify that the law does indeed apply to Judea and Samaria.

The Palestinian Authority prepared for the shift in advance. It paid a large part of terrorists' salaries several months in advance and is looking for new ways to continue the payments despite international pressure to stop doing so.

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In a landmark decision on Thursday, the Canadian Federal Court denied the refugee application of a Palestinian woman who worked for an organization that pays stipends to Palestinian terrorists and their families, the B'nai Brith Canada website reports.

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Last week, the Refugee Appeal Division found Khitam Khudeish ineligible for refugee status due to her work for the Palestinian Martyrs' Families Foundation between 1984 and 2006.

Khudeish came to Canada and applied for refugee status in 2016 when her husband was the Palestine Liberation Organization ambassador to Angola.

The foundation is at the center of the Palestinian "pay-for-slay" program, a mechanism that provides financial support to imprisoned terrorists and the families of dead terrorists.

The court confirmed that the foundation was established by the PLO "to fulfill the criminal purpose of incentivizing acts of terrorism against Israelis" and that Khudeish "made a significant contribution to the PLO's criminal purpose by issuing the sums of payments and facilitating payments to family members of terrorists."

"The Federal Court has struck a massive blow against Palestinian terrorism and in favor of its victims," CEO of B'nai Brith Canada Michael Mostyn said. "Governments around the world must take heed of this decision and use all means to pressure the Palestinian Authority to cease incentivizing the murder of Israelis."

The Palestinian Authority's "pay for slay" policy has been widely condemned by Israel and the United States, which argue that it encourages terrorism.

The Canadian decision is a further demonstration of international concern over Ramallah's practice. In 2018, the United States adopted the Taylor Force Act, which halted direct US funding to the Palestinian Authority.

Meanwhile, supporters of the Palestinian cause are openly clamoring for the Biden administration to let the Palestinian Authority wriggle out of the ban on US aid over the policy.

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"I have no problem with legitimate criticism where it is due, but this obsession with Israel needs to be addressed. This singling out of the Jewish state is wrong, unjustified, and plays a role in the rise and rise of anti-Semitism," he said.

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"Whether it manifests itself in Monsey [New York] in the United States or just down the road in South Hampstead, it arises, as we have seen in the Labour Party, when there is a failure of leadership on the grandest scale," added Polak.

The baron also raised the question of the Palestinian Authority's terroristic practice of "pay to slay," making it clear that the government has an obligation to ensure that British taxpayer money go to those in need, as opposed to rewarding terrorists convicted of heinous crimes and their families.

"In 2018, the Palestinian Authority paid over £260 million [$338 million] – around 7% of its annual budget – on salaries to killers and murderers," said Polak.

Referring to the Netherlands' discontinuation of direct aid to the PA in November because of this terror reward policy, he urged, "We must pay our way, but not when our aid is used to pay for slay. We must find a method by which aid payments serve the recipients who need our support in Palestinian society, and at the same time, serve the interests of the British taxpayer."

Though these issues have been ongoing, Polak told Jewish News Syndicate that with a new British Parliament, now is the time to raise the issues they want and "set an agenda."

"My speech was a signal that this is a priority for the pro-Israel community," he said.

In the context of a rise of anti-Semitism and violence against Jews worldwide, Polak said that he will "again raise the issue of payment to Palestinian prisoners and continue to push."

In his speech, Polak took the opportunity to congratulate the government on its new legislation making it illegal for local councils to implement boycotts against Israel. "The promise by the government to legislate against BDS was a first and shows where the new government is at in relation to these sorts of issues," he told JNS.

He then rebuked the United Nations for fixating on the world's only Jewish state. "There was one resolution on North Korea, one on Syria, one on Iran and two on Russia. There were no resolutions on China, Venezuela, Saudi Arabia or Pakistan. But there were no less than 18 resolutions on Israel. That is totally unacceptable and, what is more, far too often the UK votes for these resolutions," he said in his speech.

Polak critiqued a resolution that was passed at the UN General Assembly on Dec. 13 called "Israeli practices affecting the human rights of the Palestinian people in the Occupied Palestinian Territory, including East Jerusalem," saying, "suffice it for me to say that the resolution totally ignored terror attacks against Israeli civilians in Israel, referring to them as "tensions and violence."

It also negated deadly rocket and missile attacks by Palestinians on Israeli cities and towns over the years, and sought to strip Israel of its inherent right to self-defense by classifying every defensive measure as "a violation of international law."

In addition, he continued, "it referred to the Temple Mount in Jerusalem only by its Islamic name, Haram al-Sharif. What did we do? We voted for the resolution, whereas our allies and friends in Canada, Australia and the US had the courage to vote against it."

Polak concluded with a request that the United Kingdom look "very carefully" in the future before voting against Israel at the United Nations.

Reprinted with permission from JNS.org.

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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.

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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.

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According to Channel 12 News, National Security Adviser Meir Ben-Shabbat will brief the ministers on the details of the possible arrangement.

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Among the Israeli gestures to be discussed will be an increase in the number of permits granted to Gazans to enter Israel for trade purposes, an additional widening of the fishing zone off the Strip's coast, which currently stands at 14 nautical miles (26 kilometers), advancing construction of a natural gas pipeline, and increased medical assistance for hospitals.

The cabinet will also debate new permits for Gaza workers to enter Israel, though the Shin Bet security agency is said to oppose the move over the potential security threat it could harbor.

Hamas official Suhail al-Hindi denied the report, telling Lebanon's Al Mayadeen TV that "Israeli media reports about Israel easing measures for Gaza in exchange for Hamas ceasing fire of projectiles is not true."

The ministers are also expected to debate a proposal by Defense Minister Naftali Bennett to cut a further 159 million shekels ($46 million) from tax funds Israel collected for the Palestinian Authority in 2018, over Ramallah's payments to terrorists and their families.

The PA's "pay-for-slay" is a widely condemned practice that takes a growing cut of its budget – funded by donor countries in the West and the Arab world – every year.

Earlier this year ministers approved cuts amounting to 502 million shekels ($145 million) in PA tax revenues, the amount Israeli officials said the PA paid out in stipends to terrorists and their families in 2018.

Bennett's proposal is in accordance with the law passed last year that stipulates slashing tax transfers to the PA unless welfare payments to convicted terrorists and their families are stopped.

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The terrorists in question are Israeli citizens convicted implicated in various attacks over some 20 years that left over 45 Israelis dead and many more wounded. Five are currently serving life sentences in prison.

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The seizure order applies to the monthly stipends the terrorists receive from the Palestinian Authority, as well as stipends paid to their relatives or other beneficiaries.

This is the first time that Israel has taken direct action against the salaries paid to individual terrorists and their families, which it sees as a financial incentive for Palestinians to keep perpetrating acts of terrorism. More orders are expected to follow.

The order was signed after extensive preparatory work by the National Bureau for Counter Terror Financing (NBCTF) in the Defense Ministry in conjunction with the Shin Bet security agency, the Israel Police, the Israel Prison Service, and the Israel Money Laundering, and Terror Financing Prohibition Authority.

Bennett said that he intended to exert the full extent of his authority to stop the salaries the PA is paying terrorists and their families, a practice that has come to be known as "pay-for-slay."

"We have moved on to action. This is another step in our battle against terrorists. We are working so it will no longer be worthwhile to shed Jewish blood," Bennett said.

Earlier this month, Bennett imposed financial sanctions on a London-based terror suspect believed to have ties to Hamas. The decree he signed stated that any and all funds or assets paid or transferred to Mohammed Jamil Mahmoud Hersh, who works for a UK group affiliated with Hamas, would be seized.

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Ramallah's "pay-for-slay" policy has long been condemned by Israel and the US as a practice that encourages violence. The Palestinians argue these payments are a national duty to families affected by decades of violence.

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The Palestinian Authority routinely spends hundreds of millions of dollars on payments to terrorists imprisoned in Israel and to the families of terrorists killed while carrying out attacks against Israel.

In 2018, for example, Ramallah spent $135 million on salaries and other payments to terrorists. In 2017, terrorists' stipends came to $358 million – 7% of the Palestinian Authority's total budget for that year and about 20% of the foreign aid it receives. In 2016, the PA allocated $322 million to these payments.

Palestinian Foreign Affairs Minister Riyad al-Maliki said the prosecutor's office's report was "based on misleading narratives of a political nature ... rather than an objective and accurate description of the relevant facts."

The Palestinians have long sought redress with international bodies such as the ICC for what they consider Israeli crimes. President Mahmoud Abbas' government appeared to have been caught off guard by the language of the criticism found in the report.

Thursday's report, released in the Hague, highlighted possible crimes by both Israel and the Palestinians that are under investigation, including Israel's use of sometimes deadly force against protesters along the Israel-Gaza border fence, and Palestinian militant rocket fire and use of human shields in Gaza.

At the Palestinians' request, ICC prosecutor Fatou Bensouda opened a preliminary investigation in 2015 into alleged violations of international law following the 2014 war between Israel and Palestinian terrorists in the Gaza Strip.

Thursday's report said the prosecutor "believes that it is time to take the necessary steps to bring the preliminary examination to a conclusion."

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The PA had stopped taking the money because of a dispute with Israel over the stipends paid to the families of Palestinians terrorists killed or jailed by Israel.

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In February, Israel announced it would cut by 5% the approximately $190 million in tax revenues it transfers to the Palestinian Authority each month from imports that reach Judea and Samaria and Hamas-run Gaza Strip via Israeli ports.

The deducted sum represents the amount of money paid by the PA to families of Palestinian terrorists, including those who carried out deadly attacks on Israelis. The PA has increased those payments as of late, despite Israel's decision to withhold some of the tax revenues as a punitive measure.

The PA's decision on Friday to accept the reduced tax revenues could help it relieve a deepening financial crisis. A spokeswoman for the Israeli Finance Ministry said that 1.5 billion shekels (about $430 million) would be handed over to the PA on Sunday.

Hussein al-Sheikh, the PA civil affairs minister, said that following understandings reached with Israeli Finance Minister Moshe Kahlon on Thursday, both sides would begin discussions on a range of financial issues next week.

"The agreement was also on transferring a payment from the PA's financial dues. The dispute remains over the salaries of the families of prisoners and martyrs. We are determined to pay their dues at all costs," al-Sheikh said on Twitter.

The tax transfers make up about half of the PA's budget, according to Palestinian Finance Ministry data.

Israel calls the stipends a "pay for slay" policy and says it encourages violence.

The US Congress passed legislation last year to sharply reduce aid to the PA unless it stopped the payments.

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