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Study: PA loses $500,000 a year in tax evasion
Published Wednesday 26/12/2012 (updated) 31/12/2012 16:19
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RAMALLAH (Ma’an) -- The Palestinian Authority loses around $500,000 annually due to tax evasion, a research institute says.

MAS, the Palestine Economic Policy Research Institute, says income tax only provides 7 percent of the PA's budget because tens of thousands of workers -- including doctors, lawyers and engineers -- are not monitored by tax authorities.

At a roundtable discussion on the institute's latest study on the financial sustainability of the PA, MAS researcher Ahmad Qabajah said VAT, customs revenue and fuel tax were a major portion of the government's income.

Since its establishment in 1995, the PA has been dependent on external aid and its mutual economic relations with Israel. The PA's economy has suffered due to the instability of political relations with Israel, resulting in a culminated budget deficit, Qabajah said.

Meanwhile, the PA's running costs have constantly increased. Social services took up 43 percent of outgoing funds in 2010 and 2011, according to the researcher.

The PA spends a high percentage of its outgoing funds on security -- 31 percent in 2010 and 32 percent in 2011 -- compared to other key ministries, Qabaja said, noting that the Ministry of Health received 11 percent of the budget while the education ministry took 19.4 percent.

The PA's budget deficit started to accumulate in 2000 as a result of Israeli incursions and destruction of infrastructure, he said.

The situation improved slightly in 2007 with the flow of international aid, yet the PA’s budget deficit in 2011 was around $1 billion, equivalent to 12 percent of GDP. The PA had to borrow money from banks to cover the deficit.

In 2011, the PA's debts reached $2.213 billion, around a quarter of GDP.

Qabaja said money borrowed by the government was used to cover running costs rather than investing in projects which could improve income long-term.
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1 ) Money / Currency
26/12/2012 21:01
What I do not understand is why palestinians keep asking US and EU for money. They should go to those countries which make up the majority at UN General Assembly. Let those countries who vote for Palestinian UN membership to foot the bill and put their money next to their votes.

2 ) PA / PLO
26/12/2012 21:05
A series of consultations will be held - it sounds very promising, although we heard it before. My guess is - series of meetings will be followed by series of trips abroad by PA/PLO officials. Those trips will be extensive and long - to the remote from Middle East countries like South Africa, India, Brazil, Cuba and others. They will spend a lot of US and EU money on those meetings and trips and their bank accounts will grow as a result. This is example of really successful monetary policy

3 ) Robert Haymond / Israel-Gush Etzion
27/12/2012 11:22
"Israeli incursions"? Without Israeli construction projects and Israeli businesses operating in Yehuda and Shomrun, a significant population of Arab families residing in the Westbank would not be able to manage at all, further devastating the economic conditions of the Westbank. Should another intifada occur, wholesale economic deprivations will arise. While all this does not effect the pocketbooks of Abbas & Sons nor any of their many cronies, the majority of Arabs will suffer.

4 ) Tibi / Tubas
10/01/2013 18:27
1- The PA will lose more than $500,000 a year in a reconciliation with Hamas,
which is an internationally recognized terrorist group in both Europe and the USA, where the vast majority of the PA's donations come from, and
2- The PA will also lose from a halt to Israeli tax distributions,
since Israel will not provide taxes or money to a government, that still spends money buying rockets to fire at Israel !!
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