Israeli taxes not used for Palestinian terror payments, FADC head says

The FADC held a debate on the source of an Israeli loan of NIS 500 million to the PA last year to offset financial harm from the absence of withheld taxes.

 Committee Chairman Ram Ben Barak leads a Defense and Foreign Affairs Committee meeting at the Knesset, the Israeli parliament in Jerusalem on November 15, 2021. (photo credit: YONATAN SINDEL/FLASH90)
Committee Chairman Ram Ben Barak leads a Defense and Foreign Affairs Committee meeting at the Knesset, the Israeli parliament in Jerusalem on November 15, 2021.
(photo credit: YONATAN SINDEL/FLASH90)

Israeli tax funds were not used to help the Palestinian Authority provide monthly stipends to terrorists and their families, the Knesset Foreign Affairs and Defense Committee chairman Ram Ben Barak (Yesh Atid) said on Monday.

"I calmed down after realizing that the money to offset terrorism is not being touched, and certainly not the money of the citizens of Israel, and everything is governed by the law."

FADC Chairman Ram Ben Barak

He spoke after a special FADC debate on the source of an Israeli loan of NIS 500 million to the PA last year, to offset financial harm done by the absence of the NIS 600 million Israel had withheld from tax fees it had collected on the PA’s behalf.

Knesset legislation

The Knesset in 2018 passed legislation ordering that such funds be withheld until the PA halts its policy of providing monthly stipends to terrorists in Israeli jails and to the family members of terrorists killed executing attacks against Israelis.

 Palestinian Authority President Mahmud Abbas speaks during a meeting with journalists in the West Bank cityof Ramallah on July 03, 2019. (credit: FLASH90) Palestinian Authority President Mahmud Abbas speaks during a meeting with journalists in the West Bank cityof Ramallah on July 03, 2019. (credit: FLASH90)

Since the law’s passage, some NIS $1.76 billion in Palestinian tax fees have been frozen. That sum will soon reach NIS 1.8 billion. This raises the question of how the government had provided the PA with a NIS 500 million loan.

MK Simcha Rotman (religious-Zionist Party) accused the government of using Israeli tax fees to make the payments, noting that such a step was worse than using PA tax funds to do it.

“If the Palestinians received money, but the fund of the offset money is growing, the only conclusion is that the source of the money is from the tax money paid by citizens,” Rotman said.

“I would have preferred to hear from the Treasury that they had been politically instructed to use the offset funds. A law aimed at abolishing the economic incentive for terrorism and thus reducing terrorism has become a fine for Israeli citizens.”

Among those who raised questions of impropriety was the NGO Palestinian Media Watch. PMW attorney Maurice Hirsch had written to the FADC of his concerns that Israel had violated the Knesset legislation in transferring the funds. He also expressed those concerns at the FADC meeting.

Finance Ministry advisor Arva Alfasi said that the PA tax fees that had been withheld had not been used and that the money transferred to the PA was advanced from surplus fees Israel collects on its behalf.

“These are Palestinian funds that were transferred as an advance from surpluses that we have accumulated,” Ben Barak said.

“There is no law that prohibits such considerations,” he added, noting that previous governments had also temporarily halted the transfer of tax fees and then released them for fear of the PA’s economic collapse.