The Palestinian Authority has agreed a deal with the Israeli government in a dispute over the transfer of tax revenues.
Under the agreement, Israel will give Palestine about $570m in back-payments of fuel tax, and has promised that Palestine can collect this tax itself from now on.
In February, Israel began deducting $138m – reportedly 5% of the total tax Israel owes Palestine – from its monthly payment to PA.
This resulted in PA paying its employees just half of their salaries since February.
Since 2014, Israel has collected 75% of total tax revenue from Palestinian territories and transferred it every month to the body governing the Gaza Strip and Areas A and B of the West Bank.
Israeli officials said it was withholding the $138m a month because the money was being spent on stipends to terrorists, suspects and their families.
The PA then began rejecting all of the monthly transfers, saying it would accept the full amounts or nothing, and said that the stipends were forms of social welfare given to families of people killed or imprisoned during conflicts with Israel.
These monthly payments from Israel make up about two thirds of the PalestinianAuthority’s budget, and the dispute plunged the authority into a financial crisis.
But prime minister Mohammad Shtayyeh said that although the new deal will not end the financial crisis, the authority will begin to pay its workers more of their salary.
In August, employees will receive 60% of their salaries, as well as the 50% they are still owed from February.
Originally published on https://www.publicfinanceinternational.org