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The Ministry of Defense promotes the issuing of a tax fee on the transfer of goods in the West Bank and the Gaza Strip in order to finance check points


September 9, 2014

The Ministry of Defense is promoting a memorandum in order to issue a new law that will enable the government to collect taxes on the merchandises that are being supplied from Israel to the West Bank and the Gaza Strip. The value of the tax has not been fixed yet; however, it is supposed to cover the cost of the ongoing operations at these checkpoints between Israel and the territories. Such cost is expected to reach up to 200 million shekel a year.

The collection of such a tax fee is to be equal to any other tax on the trade transactions between Israelis and Palestinians, including the trade of alimentary products, oil barrels, and all other goods that cross the checkpoints on a daily basis, even though those checkpoints are not official borders in which it is usual to collect such type of taxes.

The Manufacturers Association of Israel (MIA) is striving to oppose the governmental initiative at hand. The General Director of the association, Mr. Amir Hayek, declared that in light of the current economic situation we must not burden more expenses on the business community's import/export transactions. Mr. Hayek added that the association is now ascertaining whether it is legal, at all, to allow the issuing of such a tax obligation, according to the Paris Agreement.

The Israeli and Palestinian industries have, of course, a mutual interest in cooperating given that the whole idea of collecting taxes will only weaken the profitability and worthwhile of the ongoing partnership between the parties.

The Ministry of Defense has expressed its position and stressed that the 200 million shekel a year do not even include all the expenses that these checkpoints involve. The Ministry mentioned a variety of services, like the loading and unloading, weighting, and the handling of the goods, all of which represent worldwide common taxes which are taken from governments at transferring points to cover their overall operational costs. They also said that this collected money might additionally enable the upgrading of the checkpoint infrastructures and the promotion of the services given there.          

The expressed position of the Israeli-Palestinian Chamber of Commerce is towards reducing any kind of taxes that will higher transfer costs of goods between Israel and the Palestinians, and vice-versa. The government should be encouraging the growth of business activity between the two partners and any other mutual activities that will strengthen the economies of both parties.