Israel
No. 45071. Israel and Norway
Agreement between the Government of the State of Israel and the Government of the Kingdom of Norway regarding mutual assistance in customs matters. Jerusalem, 13 June 2006
No. 45076. Israel and Belarus
Agreement between the Government of the State of Israel and the Government of the Republic of Belarus on the reciprocal establishment of cultural centres and their activities. Jerusalem, 11 April 2000
No. 45201. Turkey and Israel
Agreement establishing a free trade area between the Republic of Turkey and the State of Israel (with annexes. protocols and exchange of notes, Ankara, 31 October 1996 and 5 November 1996). Jerusalem, 14 March 1996
No. 30322. Israel and China
Cultural Agreement. Signed at Beijing on 20 May 1993
No. 21894. Israel and Canada
Agreement between the government of the state of israel and the government of canada on film relations. Jerusalem, 29 march 1978 [united nations, treaty series, vol. 1314, i-21894.]
No. 45201. Turkey and Israel
Agreement establishing a free trade area between the republic of turkey and the state of israel. Jerusalem, 14 march 1996 [united nations, treaty series, vol. 2532, i-45201.]
No. 48525. Cyprus and Israel
The interdependence between the Paris Protocol trade regime and structure and sources of revenue
The Palestinian trade and taxation policy framework was established in accordance with the Paris Protocol, as the West Bank and Gaza Strip came under the jurisdiction of PNA for a transitional period that was stipulated to last for only five years. The Protocol shapes the main policy framework for the management of economic affairs by PNA, not only in terms of external trade relations, but also in terms of financial, monetary and other economic relations with Israel, including policies related to importing, taxation, banking, insurance, water and energy. As mentioned earlier, this study is not concerned with assessing the deteriorating economic conditions associated with the Protocol, which has been elaborated in numerous other studies. Instead, this study is mainly concerned with investigating the fiscal and tax revenue aspects of the Protocol, in relation to the trade and taxation policies of Israel, identified in article III of the Protocol (for more information, see UNCTAD, 2014a).
Estimating some of the fiscal costs of occupation for the Palestinian people: Leakage and other fiscal losses
The concept of the Palestinian fiscal costs due to occupation is part of the overall economic costs of occupation. It is a broader concept than the leakage of Palestinian public revenues to the treasury of Israel, because it also includes other fiscal losses caused by policies and measures imposed by the occupying Power but that have not leaked to the treasury of Israel.
Rationale and background
Since 1967, the Occupied Palestinian Territory has been subject to protracted Israeli occupation that has created a hostile environment affecting the Palestinian economy and all spheres of life. Following the signing of the Protocol on Economic Relations in 1994, which was expected to improve Palestinian economic conditions, the economic policies as well as the security and military measures of Israel imposed on the Occupied Palestinian Territory have rendered the outcomes of the Paris Protocol inimical to Palestinian development needs. The Palestinian economy is characterized by deteriorating economic indicators, along with a chronic fiscal and trade deficit and a high level of dependence on the economy of Israel. This has entailed over two decades of denying the Palestinian people and economy the right to benefit from the country’s diverse natural and water resources and to make optimal use of fiscal, financial and other resources. The issue of the costs of the Israeli occupation and Palestinian fiscal losses and revenue leakage to Israel resulting from flawed application of the Paris Protocol are therefore garnering increased attention. In this context, since 2014, different studies have addressed Palestinian fiscal leakage and losses resulting from the current trading framework with Israel, the first of which was published by UNCTAD in 2014.
Cumulative fiscal leakage and losses and their impacts on the economy and employment
The estimates of fiscal leakage and losses presented in chapter V are indicators of part of the cost incurred, in only one year, by the Palestinian people as a result of the enduring Israeli occupation. As noted, the fiscal leakages covered in this study are a part of the fiscal losses, which in turn are a part of the greater economic costs of the Israeli occupation. The latter is measured by the difference between the position of PNA under two scenarios, namely, the current fiscal position of PNA under the status quo, which gives Palestinian policymakers a narrow policy space, and the assumption that occupation is removed and the State of Palestine has fiscal sovereignty over all sources of public revenues and expenditures. In other words, the cost of the Israeli occupation includes all direct and indirect losses caused by the occupation measures and control of all Palestinian resources and revenues.
The Palestinian fiscal crisis and previous estimates of fiscal leakage and losses
The trade and taxation regime currently in operation has long burdened the Palestinian economy. The many shortcomings of the Paris Protocol have allowed fiscal leakage to the treasury of Israel and entailed a lack of Palestinian sovereignty, which has led to the loss of control of tax collection, minimization of the tax base and weakening of access to information and tax records. The fiscal ramifications have limited the ability of PNA to respond to frequent humanitarian crises and meet other economic commitments and obligations.
Executive Summary
Despite the temporary state of optimism that followed the signing of the Protocol on Economic Relations (Paris Protocol), today, a steady deterioration of the Palestinian economy can be seen in most economic and development indicators, the chronic fiscal and trade deficit, and the high level of dependence on the economy of Israel. The expected gains and outcomes from the Paris Protocol were counterproductive, given that the ensuing trade framework and economic policies of Israel do not serve the interests of the Palestinian economy. Add to that the closure policy of Israel and restrictions on the movement of people and goods, and a range of security and military measures imposed on the Occupied Palestinian Territory, which have led to accumulating economic losses to the Palestinian people. The fiscal part of these losses is the main focus of this study.
Fiscal leakage and tax evasion
This chapter discusses some of the concepts related to fiscal leakage and the causes and sources of each type of leakage within the focus of this study, including the nature and mechanisms of the evasion of customs duties and taxes.
Conclusion and recommendations
The signing of the Paris Protocol inspired a new state of optimism about the Palestinian economy. Expectations relied, inter alia, on the positive indicators of improved control and monitoring of public revenues and the maintenance of sustainable sources thereof. All of that was built on the hopes that under the Paris Protocol, PNA would be able to benefit from reasonable policy space. However, over 25 years, this optimism has dissipated, leaving PNA constrained and tied to trade and fiscal policies that do not foster the growth or development of its economy. The Paris Protocol has fostered a reality that allows only minimum policy space, leading to an enduring loss of revenues and a lack of control over the largest portion of these resources and resulting in fiscal leakage and losses from many sources, in addition to the temporary or permanent seizure by Israel of Palestinian revenues, a stark violation of the terms of the Paris Protocol.