Israel to Reallocate $26 Million in Palestinian Tax Funds to Terror Victims

Israeli Finance Minister Bezalel Smotrich has announced the seizure of 100 million shekels ($26 million) in tax revenues intended for the Palestinian Authority (PA). Instead, these funds will be allocated to Israeli victims of Palestinian terror. Smotrich described this action as a direct response to the PA's practice of providing stipends to imprisoned terrorists and families of Palestinians who died while carrying out attacks.

Smotrich tweeted, "The struggle against terror is not just a military struggle, but also a fight that includes a war against the wild incitement of the Palestinian Authority and the terrorist funds which it directs from its budget to the families of terrorists."

Legal Developments and Controversies

This announcement follows a significant hearing at Israel’s High Court of Justice, where the Palestinian Authority sought to overturn legislation allowing victims of Palestinian terror to more easily claim financial compensation from the PA. It was an unprecedented move, marking the first time the PA has directly petitioned Israel’s High Court.

During the hearing, victims of terror interrupted proceedings, urging the PA's lawyer to address the contentious "pay for slay" stipends. Legal expert Maurice Hirsch noted the unusual nature of the hearing, pointing out that the judges did not request additional input from the state. Hirsch, who leads the Initiative for Palestinian Authority Accountability and Reform at the Jerusalem Center for Public Affairs, anticipates a swift ruling against the PA’s petition.

The “Martyr’s Fund” and Financial Implications

The PA dedicates approximately seven percent of its annual budget to the "Martyr’s Fund," which provides financial support to Palestinian terrorists imprisoned in Israel and to families of those killed during attacks. The payments are primarily determined by the length of the terrorist's incarceration, with minor adjustments for family size.

Israeli officials argue that these stipends incentivize terrorism and have consistently deducted equivalent amounts from the taxes collected on behalf of the PA. The new law permits families to claim judgments against the PA from these frozen funds.

Despite facing a budget deficit reported at 172%, the Palestinian Authority recently expanded its list of eligible recipients for these payments, including 899 new prisoners from Gaza. This decision, reported by Palestinian Media Watch in July, further highlights the ongoing controversy surrounding the PA's financial practices.

International Repercussions

The issue of "pay for slay" payments gained international attention after the murder of Taylor Force, an American citizen killed by a Palestinian in a 2018 stabbing attack in Jaffa. In response, the U.S. Congress passed the Taylor Force Act, which halted U.S. aid to the Palestinians until these terror stipends ceased.

Under President Joe Biden's administration, U.S. assistance to the Palestinian Authority resumed, leading to renewed legal challenges. In December 2022, American victims of Palestinian terror filed a lawsuit against President Biden and Secretary of State Antony Blinken, arguing that the resumed payments violated the Taylor Force Act.

A Controversial Path Forward

As Israel moves to redirect funds intended for the PA to terror victims, the decision underscores the ongoing tensions and complex financial entanglements between Israel and the Palestinian Authority. The Israeli government’s actions reflect a broader strategy to counter the PA's financial incentives for terrorism while seeking justice for victims and their families.

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