Photo Credit: Amos Ben Gershom / GPO
Prime Minister Benjamin Netanyahu at Defense Ministry in Tel Aviv

Prime Minister Benjamin Netanyahu says that although he plans to enact the so-called “Deduction Law” that will withhold taxes and fees collected on behalf of the Palestinian Authority in the coming days, he’s concerned that doing so will also destabilize the entity.

The Israeli legislation that withholds tax transfers from Israel to the Palestinian Authority (PA) to offset the salaries paid by the Ramallah government to terrorists or their families as rewards for murdering or attempting to murder Israelis and Jews — a practice known as the “pay to slay” policy. The stipends are paid out in varying amounts in accordance with the crime and sentence; the more violent and lethal the attack, the higher the monthly stipend.


“The PA turned itself into a factory that employs murderers [of] Jews mostly, but also Muslims, Christians, Druze, Circassians and others, including tourists,” said Knesset member Avi Dichter, one of the bill’s co-sponsors, when it passed into law in July 2018.

Israel transfers NIS 8.5 billion (more than $2.4 billion) in tax payments to the PA annually. The PA budget in 2018 stood at NIS 18.5 billion ($5.2 billion). The Ramallah government has dedicated at least seven percent of its budget towards incentivizing the murder of Jews through stipends paid to terrorists and their families.

In its 2018 budget, the Palestinian Authority increased its funding of the payments and allocated $360 million for the Prisoners and Martyrs fund, which disperses payment to imprisoned terrorists, released terrorists and the families of dead terrorists.

Under the new Deduction Law Israel’s Defense Ministry is required each year to draft a report for the Security Cabinet on the funds the paid by the Palestinian Authority to terrorists incarcerated in Israeli prisons and to the families of those who died in the attempts to carry out terrorist attacks. The financial penalty is to be determined by the report.

Israel’s Finance Minister is required to deduct the financial penalty from the taxes and fees collected on behalf of the Palestinian Authority.

MK Elazar Stern, another co-sponsor of the law, said Monday he “has no doubt that the law will reduce terrorism and the harming of the lives of Israelis, who would have otherwise joined the circle of painful bereavement.”

“The main question I have come across since the passing of the law is how no one has thought of it before, and how have we come to terms with this hallucinatory reality for so many years?” he added, expressing hope that Prime Minister Benjamin Netanyahu “will not delay the implementation of the law.”

The law mandates the deduction with no options for flexibility and leaves no room for the government to make a new decision each year on whether or not to make the deduction, based on diplomatic and other considerations.

The PA leadership has vowed to proceed with its policy of paying terrorists and supporting their families, “to their last penny,” as one official stated after the Israeli bill was voted into law.

The sum that stands to be deducted stands at hundreds of millions of shekels, a significant part of the Palestinian Authority budget.

Aryeh Savir and TPS contributed content to this report.


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Hana Levi Julian is a Middle East news analyst with a degree in Mass Communication and Journalism from Southern Connecticut State University. A past columnist with The Jewish Press and senior editor at Arutz 7, Ms. Julian has written for, and other media outlets, in addition to her years working in broadcast journalism.