Israel has agreed to allow the Palestinian Authority to collect at least half-billion dollars in tax money, which normally Israeli government collects on the Palestinians' behalf, in an effort to help relieve a burgeoning economic "crisis" constraining the West Bank, a senior PA official said Thursday.
Israel began this year withholding parts of some $200 million in monthly tax transfers that the Palestinians give to families of people killed or imprisoned in fighting with the Jewish state. Israelis say the payments encourage violence, while the Palestinians say the funds assist distressed families. In protest, they have refused to accept any funds from Israel.
Palestinian Civil Affairs Minister Hussein al-Sheikh, a senior Fatah member, said an "agreement was reached a few days ago with the Israeli side to transfer the tax money on oil and fuels which the Palestinian Authority bought in Israel, in the amount of around two billion shekels ($568 million)."
Under Thursday's deal, the Palestinians say Israel will stop collecting about $60 million in monthly fuel taxes and allow the Palestinians to collect the funds directly.
"The transfer will have positive economic repercussions, but it will not solve the problem between the Palestinian Authority and Israel," said Al-Sheikh, referring to the dispute regarding the payment of stipends to the families of Palestinians who committed attacks against Israel.
Palestinian Prime Minister Mohammad Shtayeh says the additional revenue will ease a financial crisis and allow him to slightly increase civil servants' partial salary payments, which have been significantly cut since last February.
Israel has also reportedly agreed to temporarily exempt Arabs in the West Bank from paying taxes on fuel, in order to stimulate the local economy, according to Israeli public broadcaster, KAN.
Israel in February decided to withhold some $10 million a month from revenues of some $190 million per month it collects on the PA's behalf, triggering Palestinian President Mahmoud Abbas to say he would accept either all or nothing.
i24NEWS contributed to this report