Israel Redirects Palestinian Tax Revenue to Settle Debts with Electric Company

Israel plans to use tax revenue collected on behalf of the Palestinian Authority (PA) to pay off a 2 billion shekel debt to the Israel Electric Company (IEC). The decision comes amidst a financial strain and amid tensions following an attack led by Hamas in October 2023.

Israel has announced plans to use tax revenue it collects for the Palestinian Authority to clear a 2 billion shekel debt owed to the state-run Israel Electric Company (IEC). Finance Minister Bezalel Smotrich made the announcement during a cabinet meeting, attributing the move to a combination of financial necessity and political tensions exacerbated by recent violence.

Under an agreement, Israel collects taxes on goods entering the West Bank, with the funds intended for the Palestinian Authority in Ramallah. However, since the Hamas attack on Oct. 7, funds designated for Gaza have been frozen, with Smotrich signaling that they will instead address the mounting debt to IEC.

This decision casts a spotlight on the strained relations between Israel and the PA, amidst accusations against the PA for supporting attacks in Israel. Meanwhile, the PA continues to pay partial salaries, further complicating the economic landscape. With no comment yet from the PA, the situation remains tense.