Palestinians to restart accepting tax money collected by Israel

The Palestinian Authority had stopped taking the money because of a dispute with Israel over payments to the families of prisoners and martyrs

Palestinian president Mahmoud Abbas chairs a meeting of the central committee of the Fatah movement in the West Bank city of Ramallah on October 1, 2019. AFP

The cash-strapped Palestinian Authority (PA) will once again accept tax revenues collected on its behalf by Israel, after rejecting the money for months, Israeli and Palestinian officials have said.

It will receive a transfer of 1.5 billion shekels ($430 million) from Israel, they said, a move that is viewed a step towards resolving a months-long standoff between the two parties.

Shai Babad, director general of Israel's finance ministry, said the transfer would be made on Sunday to the PA government, which is facing a crippling financial crisis caused by the dispute.

Hussein Al Sheikh, the PA minister of civil affairs, 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," Mr Al Sheikh said on Twitter.

In February, Israel decided to withhold about $10 million a month from revenues of some $190 million it collects on the PA's behalf, prompting Palestinian president Mahmoud Abbas to refuse all payments - saying he would accept all or nothing.

The money comes from customs duties levied on goods destined for Palestinian markets that transit through Israeli ports and constitutes more than 50 per cent of the PA's revenues.

Israel calls the stipends a "pay for slay" policy and says it encourages violence. Palestinians hail their jailed brethren as heroes in a struggle for an independent state and their families as deserving of support.

The United States passed legislation last year to sharply reduce aid to the PA unless it stopped the pay-outs and the Trump administration last year cut hundreds of millions of dollars of aid.

Analysts have warned that financial instability raises the risk of violence erupting in the occupied West Bank, which would represent a major security concern for Israel.