Israel withholding of taxes from PA increases likelihood of violent protests targeting West Bank administrative buildings

On 17 February, the Israeli security cabinet approved legislation that would withhold USD138.2 million in taxes from the Palestinian Authority (PA) on the grounds that the PA uses them to support the families of Palestinians jailed for carrying out attacks on Israelis. Under the terms of the Oslo accords Israel collects approximately USD222 million a month in taxes and customs duties on goods for the Palestinian market, which is then transferred to the PA.

Significance: PA President Mahmoud Abbas criticised the Israeli decision, and stated on 20 February that he would reject the transfer of all tax receipts if the family support payments were withheld. The loss of this revenue, in addition to cuts in US funding over the past year, would likely result in a severe financial crisis for the PA, and Abbas probably intends that the threat of this, and the subsequent collapse of PA security force co-operation with Israel, would be sufficient to pressure a reversal of the Israeli decision. This is unlikely; the PA is reliant on Israeli co-operation and intelligence sharing to quell potential political unrest and terrorism operations from hostile groups such as Hamas in the West Bank. It is more likely that Abbas will choose to cut the salaries of PA employees in the West Bank and Gaza in the coming weeks, raising the likelihood of violent protests against the PA administration including tax collection offices, PA radio, and television stations, and Israeli checkpoints along the West Bank security wall. These will probably involve demonstrations with stones and petrol bombs, particularly if PA security forces are used to disperse the demonstrators, but there is also a high likelihood of shooting attacks on low-level pro-Fatah activists in the main West Bank cities of Ramallah, Nablus, Jenin, and Hebron. Indicators of rising protest risks would be the temporary closure of public buildings and schools in the West Bank as this would increase the likelihood that employees without pay and students would mobilise for demonstrations, and also if any prisoners in Israeli prisons instigate violent or non-violent protests in response.