Israel’s Cabinet Approves Plan for Frozen Tax Funds Targeting Gaza

Israel’s cabinet has given approval to a plan redirecting frozen tax funds meant for the Hamas-controlled Gaza Strip to be held by Norway instead of being transferred to the Palestinian Authority (PA), according to officials on Sunday.

Per the interim peace accords from the 1990s, Israel’s finance ministry collects taxes on behalf of the Palestinians and makes monthly transfers to the PA, operating with limited self-rule in the Israeli-occupied West Bank. Disputes have arisen over this arrangement, particularly concerning Israel’s insistence that the funds do not reach Hamas, labeled a terrorist group by Israel and most of the West.

Following Hamas’ takeover of Gaza in 2007, Israel withdrew settlers and military forces. Despite this, many PA public sector employees in Gaza retained their jobs and continued to receive salaries funded by transferred tax revenues.

Amid the ongoing conflict in Gaza to eliminate Hamas after a cross-border terror attack in October, Israel’s cabinet, with the support of Norway and the United States, has decided to hold the tax funds or their equivalent. The funds will not be transferred under any circumstances without the approval of the Israeli finance minister and not through a third party.

The Palestine Liberation Organization (PLO) expressed its rejection of any conditions preventing the PA from paying its staff, including in Gaza. The PLO insists on receiving the funds in full. Israeli Finance Minister Bezalel Smotrich confirmed that Norway would hold the funds, emphasising that none of the funds would go to Gaza, aligning with his longstanding opposition to transferring funds to the PA.