The cabinet on Sunday unanimously passed a resolution completely rejecting the UN decision Thursday to upgrade the Palestinians to non-state observer status."The Jewish people have natural, historical and legal rights to its homeland with its eternal capital Jerusalem," the resolution stated. "The State of Israel as the state of the Jewish people has rights and claims to areas are under dispute in the land of Israel." The cabinet decision says that the UN resolution does not change the status of disputed areas and does not detract in any way from Israel and the Jewish people's right to those areas.Furthermore the resolution said that the UN resolution will not be a basis for future negotiations.In another response, Finance Minister Yuval Steinitz said at the cabinet meeting that he will not transfer to the Palestinian Authority taxes it collects on behalf of the Palestinians. Steinitz said he would "use the funds to offset the PA's electricity debts."The finance minister decried the Palestinian efforts to create a state without addressing security concerns, disarmament or recognizing Israel, adding, "We said this wouldn't pass quietly."Ahead of the cabinet meeting, Prime Minister Binyamin Netanyahu stated that Israel will increase and hasten settlement activity in response to what he labelled "an attack against Zionism." "Israel will not allow Judea and Samaria to become a terror base from which rockets will be launched into Israeli towns," he asserted. "There will be no Palestinian state until Israel is recognized as a Jewish state alongside a resolution to end the conflict," he added.The cabinet resolution comments follow Friday's decision to approve 3,000 new housing units in Jerusalem and the West Bank, which drew international condemnation as well as criticism from the Left.