Israel has announced that it is to withhold taxes that it collects on for the Palestinian Authority in retaliation for the successful bid at the United Nations for non-observer status.
Israel’s Finance Minister, Yuval Steinitz, has said that he will not be passing on the funds, rather that the money would be used to repay debts owed by the PA.
“I have no intention of transferring the taxes due to the Palestinian Authority (PA) this month. They will be used to pay the PA debts to the Israeli electricity company," Steinitz said.
Israel has also announced that it will build up to 3,000 settler homes in the West Bank, in protest of the upgrade at the UN.
The transfer of taxes is governed under the Paris Protocol of 1994. Israel has previously refused to release the money that Palestine is owed in response to political or diplomatic tensions.
Israel’s Haaretz newspaper has estimated that Palestinians will be denied around 460 million shekels ($120 million). Without the money, the PA will not be able to pay government salaries.
Palestine is currently going through one of the worst economic crises in living memory, as donor money begins to dry up and growth has dropped off dramatically.
Earlier this year, there were protests against the PA after the government could not pay public sector wages.
