The State of Israel pays the Palestinian Authority approximately $100 million per month, though this was paused as of this month. While I’d seen this described as “taxes collected”, the description made no sense to me. What taxes is Israel collecting that belongs to the Palestinian Authority?
Maybe it is really bribe money or basically buying them off?
I didn’t know, so I did a little research. Here’s what I found, with my own thoughts mixed in…
(Excerpted from article) By Daniel Engber – Slate
…Why does Israel collect taxes for the Palestinians?
That's the arrangement they worked out during the Oslo accords of the early 1990s. Before the Palestinian Authority was set up, the Israelis taxed imports and exports in the occupied areas and withheld payroll taxes from visiting Palestinian workers. (This is a strange misnomer – Israel taxes imports/exports to and from Israel, whether they’re headed to a Palestinian area or to Jordon, exactly like any other country. And if someone works in Israel, whether they’re Palestinian or American, they pay Israeli “non-resident worker” taxes.)
The PLO and the Israeli government had to work out a new taxation system for the newly self-governing areas. The Protocol on Economic Relations of 1994 gave the PA the right to collect taxes directly from its people, and indirectly via Israel. (Meaning Israel was pressured to send them some money to give them an economy, but it was wrapped up nicely as a “tax transfer package.”)
Here's one example: Israel continued to collect customs duties and the "value-added tax" on imports that came through Israeli ports. But if those imports ended up in the Palestinian areas, Israel would have to turn that money over to the PA. Israel is also supposed to send back the value-added tax that Palestinians pay for Israeli goods, as well as any excise taxes that Palestinians have to pay for fuel, cigarettes, and alcohol.
(Ok, let me see if I have this straight. If a Palestinian buys a pack of cigarettes in Israel, the taxes on that purchase go to the Palestinian Authority. Just like if an Israeli buys a pack of cigarettes in New York, the taxes go to…NEW YORK – BECAUSE THAT’S THE GOVERNMENT PROVIDING THE INFRASTRUCTURE ALLOWING FOR THE PURCHASE.)
Palestinians who work in Israel provide another important source of revenue for the PA. According to the Protocol on Economic Relations, the PA gets back more than three-quarters of the money withheld from the paychecks of Palestinians who work across the border.
(Of course, they occasionally bomb industrial zones created to provide them jobs, like the Erez zone by Gaza, and/or boycott industrial zones providing them jobs like in Barkan. They also boycott working locations like in the settlements, yet demand more tax money at the same time. Strangely, when I work in Israel I get taxed by Israel and the United States doesn’t get anything.)
These rules go both ways. The PA collects (a tiny bit of) money on behalf of Israel, as well.
(Not too many Israelis working in Ramallah or Gaza [none?]. Not a healthy work environment for a Jew. Not healthy at all.)
On the 20th of each month, representatives of each government get together to go over recent transactions and determine the total rebate.
(And since there is no way to actually track purchases of Palestinians in Israel or the actual pay slips of each Palestinian worker, who even further are probably getting paid in cash and no actual taxes are being withheld, at best they’re estimating by number of work permits issued. This is all imaginary transactions, guesses and demands.)
The final number reflects the indirect taxes owed to the PA, minus anything the Palestinians owe for Israeli utilities like electricity and telephone service. Once the two sides have sorted through the bills and receipts, Israel is supposed to hand over the rebate within six days.
(Except they haven’t been subtracting the utilities, meaning Israel has been remitting the demanded amount NOT including the multi-million dollar electric bill. So who pays it? My electric rates increased 20% in the past 2 years, that’s who.)
The amount of the transfer varies from month to month, depending on how much the Palestinians happened to buy or import. Payments tend to be about $100 million (article originally said $50 million, but was written in 2006), which covers around half of the Palestinian Authority's total operating expenses…
(It’s worth noting half the Palestinian Authority’s operating expenses are subsidies for convicted murders and terrorists sitting in Israeli prisons. So Israel is “paying collected taxes” (ha) to cover the family living expenses of mass murdering terrorists and the missile purchase expenses of those trying to destroy it, bound by an agreement that the other side violated by firing missiles and double-violated by going to the U.N.
No worries, it’s all good.)