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PA cabinet agrees to lower top tax rate

Feb. 14, 2012 11:05 P.M. (Updated: Feb. 15, 2012 6:10 P.M.)
BETHLEHEM (Ma'an) -- The Palestinian Authority cabinet agreed Tuesday to lower its top tax rate after a proposal to double income taxes drew widespread outrage across the West Bank.

The proposals to plug a $1.1 billion deficit in the public budget included doubling the top tax bracket to 30 percent, but the PA approved a lower rate of 20 percent at a cabinet meeting on Tuesday.

It said the rate followed "agreed upon understandings" with a private sector coordination council which had spoken out against tax rises, warning they could have the reverse effect on an already fragile economy.

The cabinet vowed to meet international standards on labour standards and union activities, and continued support to the agricultural sector.

It also announced the formation of a technical committee to push fiscal changes through the necessary legal processes, after consultation with all affected.

Rallies were held across the West Bank in recent weeks after PA Prime Minister Salam Fayyad introduced the new economic measures.

His government, hit by funding cuts from foreign donors, aims to reduce to deficit to $750 million in 2012.

Fayyad had budgeted for $1 billion in foreign aid in 2011, but less than $750 million arrived. During the year, the PA almost tripled its 2010 deficit of $350 million.

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