Source: Hamas resorts to tobacco taxes to pay state employees
In light of a religious debate concerning the permissibility of cigarettes in Islam, the Hamas-led government in the Gaza Strip had restricted the use of money from tobacco taxes to infrastructure projects, but a source says it's now using those funds to pay salaries.
The government in the Gaza Strip, which has been led by Hamas since 2006, has stressed multiple times that the taxes imposed on cigarettes and shisha tobacco since 2010 are aimed at reducing smoking, and that they are used to fund infrastructure projects and not to pay government salaries — given that tobacco is forbidden in Islam. However, Al-Monitor has learned from a government source that the Hamas government, in light of its financial crisis, has begun using cigarette taxes to pay part of employee salaries.
Speaking to Al-Monitor, the source said: "Because of the fatwa issued by the Palestinian Legislative Council in 2010 prohibiting the use of funds collected from cigarette taxes to pay employee salaries, the government decided to limit their use to restoring infrastructure via sanitation projects. However, recently the government has been using money derived from tobacco taxes — which is placed in a special account at the local post office — [for other purposes], on the grounds that they consider it a debt to be repaid later."
The Ministry of Economy in the Gaza government had previously announced that the losses incurred from the shutdown of tunnels amounted to $230 million a month, after the Egyptian authorities destroyed the majority of tunnels along the border between the Gaza Strip and Egypt starting in June 2013.
According to economic analyst Omar Shaban, the Gaza government primarily depended on funds collected from taxes on fuel, cement and tobacco to pay its expenses. These funds were used to cover a large part of the government's expenses, along with other collected taxes such as income tax.
