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Israel-Palestinian tax deal has implications beyond economy

The compromise over Israel's withheld tax revenues from the Palestinian Authority could present a step toward recognition of Palestinian sovereignty.
Israeli Finance Minister Moshe Kahlon speaks during a ceremony whereby Amir Yaron is sworn in as Bank of Israel governor by President Reuven Rivlin, in the presence of Prime Minister Benjamin Netanyahu, in Jerusalem December 24, 2018. REUTERS/Amir Cohen - RC1473F276D0
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Israel transferred 1.5 billion shekels ($431 million) to the Palestinian Authority on Oct. 6. It was tax money that Palestinian President Mahmoud Abbas had been refusing to take because Israel had deducted a portion of it. With the transfer over the next few weeks of another billion shekels, the Palestinian Authority will be spared economic devastation. The transfers mark the end of six months of power games and mutual recrimination between Israel and the Palestinian Authority. Neither side won — more precisely, both sides came out losers.

To summarize, in early July 2018, the Knesset adopted the deduction law, which enabled the Israeli authorities to deduct stipends paid by the Palestinian Authority to Palestinian prisoners and families of Palestinian assailants from tax revenues collected by Israel on the PA’s behalf. The bill was advanced by two Knesset members: Avi Dichter (Likud) and Elazar Stern (Yesh Atid). They both crowed about how the law would teach the Palestinians a lesson and prevent them from encouraging terrorists to kill Jews. Right before the vote Dichter, a former Shin Bet director, sent a message to Abbas in Arabic: “A curse on your house, Mr. President. Instead of the Palestinian Authority that you head spending money on health care and education, you, Mahmoud Abbas, spend 7% of your budget on terrorism!”

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