Palestine’s Rising Deficit Prompts Legislature Meeting

Article Summary
Confronted with continuing economic stagnation and falling tax revenues, the Palestinian Authority convened a meeting in Ramallah to discuss the country’s financial situation. Increasing cooperating with income tax collection and cracking down on tax evasion are top priorities.

Finance Minister Nabil Qassis said the decrease in foreign aid to the Palestinian Authority (PA) is behind the financial crisis, as donor countries failed to fulfill their financial commitments to support the PA. He pointed out that the deficit in the PA’s 2012 budget exceeds $1 billion. However, European aid arrives on time and on a regular basis, the minister added.

This information was revealed in a meeting held at the headquarters of the Palestinian Legislative Council in Ramallah. Chaired by MP Azzam al-Ahmad, head of the “Fatah” bloc in the parliament, the meeting was convened to hear from Qassis about the PA’s financial and economic situation.

Qassis said that as of the beginning of next year, understandings reached with Israel will be implemented. The understandings regulate the compensation tax invoice and its collection mechanisms, and help combat tax evasion. The mechanisms that were in place in the past allowed tax evasion to occur. He added that the deals include regulations for importing oil products which would be transported through pipelines instead of tanks. Qassis mentioned that Israel is deducting medical expenses of Palestinian patients in Israel’s hospitals and the electricity costs from the Palestinian tax revenues before they are being returned to the PA. He said collecting income taxes has improved, but not as much as expected, and continued that the main factor of the severe financial crisis is the uncertainty of future foreign aid, without which the PA cannot cover its commitments.

Commenting on the World Bank’s report that mentioned that Israel is making restrictions on the Palestinian economy and considering the PA partially responsible for the crisis, Qassis said anyone who  believes that the PA is capable of fulfilling its obligations under the occupation when it has no control over its resources is mistaken. Qassis talked about the recent Saudi grant, valued at $100 million, half of which was used to pay the due June salaries and the second half will be used to pay July bills. Qassis showed that while the deficit in the balance of payment with the national income didn’t exceed 1% in 1997 and rose to 24% in 2007, it decreased to 13% in 2011. He added that up to 45% of the budget is spent in Gaza Strip, but Gaza’s revenues do not even reach 2% of the budget. 

Palestinian MPs commended Qassis’s readiness to communicate with the legislative council and inform its members about the PA’s financial and economic situation. The MPs agreed that they will further communicate with Qassis and meetings would be held to discuss all financial topics, including the income tax act, to which the legislative council has added several recommendations.

The meeting was attended by MPs Azzam al-Ahmad, Hanan Ashrawi, Bassam el-Salhi, Qais Abdul Karim, Khalida Jarrar, Mustafa Barghouti, Ahmed Abu Houli, Abdullah Abdullah, Abu Ali Yatta, Ahmed Hazzaa Shraim, Walid Assaf, Najat Abu Bakr, Najat al-Astal, Sahar Qawasmeh, Abdulhamid al-Ayla, Alaa yaghi, Faisal Abu Shahla, Mohib Awad, Ibrahim al-Masdar, Yehya Chamia, Rajai Baraka, Bernard Sabella, Fayez al-Saqqa, Fouad Kokaly and Jihad Abu Zneid.

Found in: tax evasion, palestinian economy, palestinian budget, palestinian legislative council, palestinian authority, palestinian, nabil qassis, government, economic, budget

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