Israel has again blocked the transfer of tax revenues to the Palestinian Authority, turning a routine monthly payment into a direct financial strike against Ramallah’s terror-reward system and mounting international campaign against Israel. Finance Minister Bezalel Smotrich said the funds would not be sent while the PA continues backing terrorists and waging diplomatic warfare against the Jewish state.  

The numbers are significant: Israel collected more than 740 million shekels, roughly $200 million, in PA tax revenues this month. According to the Finance Ministry statement cited by Israeli media, about 590 million shekels were deducted to cover debts the PA owes to the Israel Electric Corporation, along with water and environmental bodies. Additional sums were offset over money Ramallah had allocated to terrorist elements and families of terrorists, while the remaining balance was frozen.  

Smotrich framed the move as both a security measure and a message to the PA: “Whoever chooses to fight the State of Israel in the international arena and to support terrorism will bear the price.” His office said the policy is meant to prevent even one shekel from encouraging terror while also recovering debts that Israeli citizens have effectively carried through utility and infrastructure costs.  

The PA immediately pushed back. Prime Minister Mohammad Mustafa accused Israel of imposing what he called “economic occupation” and said Ramallah is working with international actors to pressure Israel to release the funds. He also admitted the PA is operating without its customs and tax income, a major blow to an authority that has already struggled for years to pay public-sector salaries in full.  

At the center of the fight is the clearance-revenue system created under the Oslo-era Paris Protocol, under which Israel collects customs and tax funds on behalf of the PA. Those revenues usually total hundreds of millions of shekels a month. But Israel has increasingly used offsets and freezes to block money tied to PA payments to terrorists and their families, the system widely known as “pay for slay.” Israeli lawmakers advanced the offset policy in 2018 to pressure Ramallah to stop rewarding terrorism, and JNS reports that roughly one billion shekels a year in revenues collected by Israel for the PA has gone toward those stipends.