Israel has released 435 million shekels ($116 million) of withheld tax revenue to the Palestinian Authority, marking the first transfer since April, according to statements from both the Israeli and Palestinian finance ministries on Wednesday.
Under a longstanding agreement, Israel collects taxes on goods passing through Israel into the West Bank on behalf of the Palestinian Authority and subsequently transfers the revenue to Ramallah. Following the Hamas-led assault on Israel on October 7, Israeli Finance Minister Bezalel Smotrich had withheld funds designated for administrative expenses in Gaza. Additionally, Israel deducts amounts for electricity, water, and the treatment of Palestinians in Israeli hospitals.
Despite these deductions, Palestinian officials claim the transferred amount falls significantly short of the monthly taxes collected. Smotrich, an ultranationalist, has been against forwarding funds to the PA, which utilizes the money to pay public sector wages. He accuses the PA of backing the October 7 attack orchestrated by Hamas, the militant group that governs Gaza. Currently, the PA is able to cover only 50-60 percent of salaries.
Israel also withholds an amount equivalent to the total of so-called martyr payments, which the PA awards to families of militants and civilians killed or imprisoned by Israeli authorities. Last week, Smotrich consented to this month's transfer after securing concessions from Israel's cabinet regarding sanctions against PA officials and the legalization of five Israeli settlements in the West Bank.
In a statement following its cabinet meeting on Wednesday, the PA noted that its diplomatic efforts and international pressure had resulted in Israel's decision to transfer the funds. The PA further expressed its intention to recover over six billion shekels of withheld funds to fulfill its financial commitments.
