RAMALLAH, West Bank - The Palestinian Authority announced Sunday it was suspending plans to raise income tax that have sparked widespread protests but said it was still seeking ways to cut costs in 2012 to plug a gap resulting from lower-than-expected foreign aid revenues.
PA Prime Minister Salam Fayyad said earlier this month that the Palestinian Authority was planning to double the income tax rate to 30 percent as part of efforts to cut the budget deficit to $750 million in 2012, from $1.1 billion a year earlier.
"He (Fayyad) will ask the ministerial council at its next meeting on Tuesday to suspend collection of tax advances set on the basis of the new tax bracket," Fayyad's office said in a statement.
The Western-backed Fayyad sparked protests in various parts of the West Bank when he announced plans to double income tax on high earners from 15 percent, while more companies and other entities would have to pay tax on their operations.
Government spending would also be cut and some of the Palestinian Authority's 153,000 public sector workers might be forced into early retirement.