Gaza traders face new taxes, import restrictions

GAZA CITY, Gaza Strip — Hamas’ Ministry of National Economy in Gaza decided Dec. 17 to prevent Gaza traders from importing any goods without its prior consent, a measure it took without any coordination with the Palestinian national consensus government.

This comes at a time when Hamas is reeling under the brunt of a severe financial crisis that hit it in 2014 as a result of the Egyptian army's campaign that started Oct. 26, 2014, and that led to the establishment of a border buffer zone with the Gaza Strip to destroy border tunnels. These tunnels served as Hamas' main funds and weapon supply routes.

The ministry also decided to impose new taxes on imported goods that have a “local alternative of a high quality.” In this context, the ministry published a list containing 95 items and commodities, including flour, oil, biscuits, juices, soft drinks, shampoos and soaps, all kinds of plastics, furniture and wooden articles, sanitary ware, honey and nuts.

The items on the list are deemed to have a local alternative of a high quality.

The ministry said violators will be prosecuted and their imported goods confiscated.

Abdel Nasser Awad, the director general of the Department of Industry at the Ministry of Economy in Gaza, told Al-Monitor, “The decision to require import permission and impose taxes on certain goods is aimed at protecting national products.”

He said domestic industries are suffering from crises that keep increasing production costs. Chief among these problems is the power crisis, which makes the prices of local goods expensive compared with imported goods.

Awad said the new taxes amount to 3,000 shekels ($800) for every container loaded with food and 4,000 shekels ($1,066) for every container loaded with other commodities.

He added that Gaza has an abundance of imported goods, especially from Israel and Europe, and that this has negatively affected local factories as they have been forced to lay off most of their employees. He said the imposition of taxes on imported goods will make local products more economical to buy.

But a number of private sector institutions in Gaza, including the Gaza Chamber of Commerce and Industry and the Palestinian Federation of Industries, held a meeting with officials from the Ministry of National Economy on Dec. 19 to push for the cancellation of the decision.

Chairman of the Palestinian Federation of Industries Ali al-Hayek, who attended the meeting, told Al-Monitor, “The private sector was not aware of the decision of the ministry. It was quite a shocking and surprising decision.”

He added, “Import permits are not aimed at protecting local products but at collecting [money].” 

He said no conditions should be imposed on imports given that local products do not meet the quality of imported goods.

Industrial sectors in Gaza are in dire straits. According to a report issued by the Palestinian Center for Human Rights in June 2017, the production capacity of industrial factories in Gaza decreased to 23% of their capacity prior to the 2014 war.

Wadah Bseiso, the treasurer of the Palestinian Federation of Industries in Gaza, told a press conference held in Gaza on April 12, 2017, that 70% of workers in industrial sectors have been laid off due to the siege and the war.

Hayek said the private sector objected during the meeting to the list of imported goods that would face new taxes.

“The decision imposes taxes on goods that have a local alternative of a high quality, but most of the goods on the list do not have such an alternative,” he said.

He pointed out that during the meeting, representatives of the private sector agreed to form joint committees representing both the private sector and the Ministry of National Economy to discuss the list of goods to be taxed in order to mark off the ones that do not have any local alternative or that have local alternatives of a low quality.

Hayek stressed that the private sector appreciates the initiative to find an equation that protects traders and national products, as such products reduce unemployment in Gaza, “but this should not be achieved through additional taxes on imported goods.”

Statistics published by the Palestinian Central Bureau of Statistics in July said the unemployment rate in the Gaza Strip was 53.7%.

Aiman Aloul, a Palestinian journalist who works for Alghad TV, published a Facebook post Dec. 19 saying the Association of Clothing Traders in the Gaza Strip denounced the decision of the ministry and said it aims to increase the ministry’s revenues rather than protect national products.

Emad Abdel Hadi, the head of the Association of Clothing Traders in the Gaza Strip and the owner of a clothing store in Gaza City, told Al-Monitor, “The decision is unjust and unfair.”

He said, “The timing of the decision is irrational as the level of imports is currently low across most economic sectors in Gaza, especially the clothing sector, which has decreased its imports 30% in recent months due to the low purchasing power of citizens.”

Abdel Hadi called on the ministry “to revoke its decision because it is inconsistent with the bad economic situation.”

Mohammed Abu Jiyab, the editor-in-chief of Al-Eqtesadia newspaper in Gaza, told Al-Monitor, “The imposition of taxes and import permits on traders will only increase their financial burden. Most traders in Gaza suffer from rising debts and insufficient liquidity.”

Issam Youness, the manager of Al-Mezan Center for Human Rights, tackled the issue of economic, social and cultural rights in the Gaza Strip at a press conference in Gaza City on March 18. He said, “Bounced checks increased from 6% in 2014 to 11% in 2017” and pointed out that many traders and businessmen are facing prison sentences due to their inability to settle accumulated debt.

According to the center, 100,000 arrest warrants were issued against such individuals and traders in 2017.

Abu Jiyab added, “National products should not be protected through additional taxes on imported goods. One way of supporting national products is to reduce the production cost. Factory owners should be fully exempted from taxes on imported raw materials and should be provided with power supply around the clock. Also, technical engineering teams should be formed in order to enhance the quality of Palestinian products.”