Rafah Tunnels Smugglers Fed Up with Hamas' Heavy Taxes

The owners of private tunnels connecting the Gaza Strip to Egypt, and their workers, see nothing wrong in using the passages to break an Israeli blockade on commodities such as building materials. Gaza's Hamas government, for its part, sees nothing wrong in taxing this illegal goods traffic. Danny Rubinstein reports that now, fed up with rising taxes, the smugglers are on strike!

al-monitor A Palestinian smuggler climbs down into a tunnel beneath the Egyptian-Gaza border in Rafah 14/04/2010. Photo by REUTERS/Ibraheem Abu Mustafa.

Topics covered

Feb 15, 2012

A report published several days ago in the Palestinian media announced that a strike in the Rafah tunnels followed new taxes imposed on tunnel owners and workers. Smugglers on strike? A short inquiry in Gaza reveals that these smugglers — some several thousand private tunnel owners and their workers — find nothing illegal in their activity. Indeed, they see themselves as true patriots, freedom fighters struggling to break the Israeli blockade. They thus expect the Hamas government to duly support them and compensate the 200 families of Palestinians killed in accidents in the tunnels or in IDF bombardments during the past five years. However, the Hamas government does not view them as fighters, but rather as a source of revenue, and levies more and more taxes on the smuggled goods.

"They are going to raise taxes even more"

The tunnels are used to smuggle commodities such as fuel, cars, spare parts and cigarettes, sold in Egypt at a lower price than in Gaza, as well as commodities whose shipment through the official border crossings is banned by Israel. Banned goods are primarily building materials and products liable to be used for military purposes, for instance, chemical fertilizers, electrical equipment and electronics. On all of these, the smugglers are taxed by the Hamas government.

In an interview to a Ramallah newspaper, Abu Iyad, a tunnel owner who smuggles mainly building materials, said: "I pay a 10-shekel tax on every ton of gravel passed through the tunnel, 20 shekels on every ton of cement and 50 shekels on every ton of iron. And now I am told that they are going to raise taxes even more."

Complaining about the increase in taxes, Abu Musab, another tunnel owner, told a Palestinian newspaper: "I understand the Hamas government's need to tax the commodities passing through the tunnels. However, such taxes should be levied in proportion."

Income tax of 6 percent per smuggler

The tunnels have been operating at full blast for about five years. However, only in the past two years have they have become formally recognized passages where customs and other taxes are collected as a routine matter by the Hamas government. The Gaza border authority has erected a gate in Rafah through which all the goods coming out of the hundreds of tunnels have to pass.

At the moment, the tunnel workers are not paying any income tax. However, rumors are spreading in Gaza that the Hamas government aims to impose a 6 percent income tax on tunnel workers. The high taxes already levied and the rumors of yet another tax to be imposed have triggered resentment and anger among tunnel owners and their workers and led to limited strikes here and there.

Since the international community boycotts Hamas, and aid funds channeled by Iran and Syria have significantly decreased due to the political circumstances in both countries, the Hamas government has no choice but to look for other sources of revenue to cover its expenses. Much to the smugglers' dismay, it seems that taxing the goods smuggled through the tunnels is the only solution the Hamas government has found.

Continue reading this article by registering at no cost and get unlimited access to:
  • Al-Monitor Archives
  • The Week in Review
  • Exclusive Events
  • Invitation-only Briefings

More from  Danny Rubinstein