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Israel takes cut of Palestinian tax revenues

Sept. 12, 2012 9:37 P.M. (Updated: Sept. 16, 2012 10:18 A.M.)
By: George Hale
RAMALLAH (Ma'an) -- Israeli authorities have seized millions of shekels in tax revenue for the Palestinians to compensate for an Israeli company's unpaid electricity bills, officials said Wednesday.

Finance Ministry officials say Israel kept 35 million shekels ($9 million) of the 260 million shekels ($66 million) in customs taxes it collected on behalf of the Palestinian Authority in September. The Israeli Ministry of Finance confirmed the deduction.

The reduced transfer of 225 million shekels ($57 million) would still be an advance of about half the revenues Israel collects monthly on behalf of the Palestinians. It is a welcome gesture to the embattled Palestinian government as it faces sustained protests against its policies.

But the reduction also underscores Palestinian complaints that their economy is too tightly intertwined with Israel. Protesters on Tuesday burned copies of the Oslo-era Paris Protocol, which gives Israel the final say on Palestinian tax rates and external trade.

Finance Ministry spokesman Rami Mehdawi told Ma'an that Israel had not coordinated with the Palestinian Authority before taking the deduction. Israeli authorities occasionally take a percentage of the revenues to cover power and water, he said.

A day earlier in Jerusalem, Israeli Prime Minister Benjamin Netanyahu said he was working with the Palestinians to reform tax agreements and ease the crisis. He said the advance, which he placed at 250 million shekels ($63 million), was "in our common interest."

"We are working on several fronts in order to help the Palestinian Authority cope with its economic problems," Netanyahu said in a meeting with Bulgaria's visiting prime minister.

"Of course, there is a global reality and it is also related to the internal management of every economy, but for our part we are making efforts to help the Palestinian Authority survive this crisis. I hope that they will succeed in doing so; this is our in our common interest."

Blackouts postponed

The transfer came as the main Israeli and Palestinian electricity companies reached an agreement to keep power flowing in the occupied West Bank through the end of September.

The Palestinian Authority's Jerusalem District Electricity Co. has accumulated over 400 million shekels ($100 million) in unpaid bills to the Israeli Electric Corp., which supplies West Bank cities with power.

But on Wednesday the head of the Palestinian company said his Israeli counterparts had agreed to postpone threatened blackouts due to the perilous state of the Palestinian economy.

Hisham al-Umari told Ma'an that the Israeli company had sent word it was giving the Palestinians more time to pay off their debts.

“In light of the tough economic conditions, and the ongoing popular protests in Palestinian cities in the West Bank, the Jerusalem company has recently reduced the pressure on subscribers who have unpaid bills,” al-Umari said. He said the company would keep making daily payments.

In Ramallah, meanwhile, diplomats and foreign finance representatives met with Palestinian officials ahead of a meeting of international donors in New York. Finance Minister Nabil Qassis was expected to attend those talks along with the minister of planning and other economy officials.

The Palestinian Authority says it has received only 40 percent of some $1.3 billion in international assistance it had included in projections for 2012. Since June, the budget shortfall has prevented the government from paying full salaries to tens of thousands of employees.

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