Budgets and Balance Sheets: The Fiscal Sociology of the Palestinian Authority

*Photo courtesy of the New York Public Library (@nypl)

Budgets are moral documents. They evince who and what a society—or at least that society’s political class—value. They make plain how the public interest is interpreted. They establish what, precisely, constitutes the bonds of life led inside a collective. And they delineate how a polity chooses to care for its most vulnerable.

By extension, budgets also tell us a great deal about power—about those who bear it and about the ends to which they use it. Free from the distortions of our political spectacle, they grant a rare look into the material reality of governance.

Sui generis as the Palestinian experience may be, the budgets and balance sheets of the Palestinian Authority (PA)—the pseudo-state governing parts of the occupied West Bank—reveal as much about power and morality as do any other government’s. By excavating what these documents record, this article will furnish a sketch of the fiscal sociology institutionalized under the PA’s watch, and a novel look at the class politics underpinning it.

The Income of the Palestinian Authority

The Palestinian Authority is financed through five primary sources: (i) donor contributions; (ii) administrative fees; (iii) customs revenues; (iv) domestic tax revenues; and (v) loan arrangements.

Donor Contributions and Administrative Fees

Through a concerted effort to support the peace building initiatives led by Secretary of State John Kerry during the second term of the Obama administration, donor contributions to the Palestinian Authority reached an all-time high of $1.4 billion in 2014.

Once Kerry’s attempt ran its inevitable course, aid inflows began steadily receding. If already contracting by the late Obama period, this downward momentum was then accelerated upon the ascendance of the Trump administration.

Discarding the prevailing policy consensus and the United States’ nominal commitments to the two state solution, the Trump White House’s conspicuous alignment with the Likud party and the Israeli settler-colonial project more generally redounded onto Palestine first through a reduction in American support for the United Nations Refugee Works Agency (UNRWA), the organization responsible for providing education, social, and health services to Palestine’s refugee communities since 1949. Under Trump’s direction, funding for UNRWA was cut by roughly 85% in 2018 (or $300 million) before being eliminated altogether in 2019. In January of that same year, American direct budget support to the Palestinian Authority abruptly came to a close as well.

By virtue of these changes, as of the end of 2019, the PA reported receiving a mere $521.9 million in aggregate international grants and aid, $248 of which came from foreign governments—EU member states and Saudi Arabia primarily—and $250.3 of which was provided by an assortment of international organizations.

Closely correlated with oil prices, international aid has thus far witnessed another decline in 2020 due to dynamics introduced by the coronavirus and the Russian-Saudi game of chicken that played out during the months of early spring. If quarterly contractions should continue, annual aid receipts this year will amount to roughly one-third of the 2014 total.

On account of this decline in donor contributions, revenues raised through various administrative fees now actually make up a percentage of government income roughly equivalent to that of aid. North of $550 million since 2017, these inflows represent approximately 12.5% the Authority’s aggregate annual take. (The particular source for more than 31% of these administrative fees were not attributed in the June 2020 reporting of the PA’s Ministry of Finance. The majority of the remaining 69% are attributed to charges and fees related to transportation, land registration, health insurance, and healthcare provision.)

As the graphs above make clear, in terms of magnitude, the income derived from donor and administrative fees pale in comparison to the yields of domestic tax and customs revenues. Fluctuating between $2.8 and $3.4 billion since 2015 (the 2019 yield was $3.25 billion), these two streams have generated 70-75% of the PA’s total income across most of the contemporary period.

While customs are clearly fundamental to the PA’s (fleeting) grip on solvency—and while they are deeply problematic from strategic and developmental perspectives: dependence upon this income renders the PA vulnerable to the predations of the Israeli state, as is discussed at length here, and incentivizes it to maintain the economy’s dangerous import-driven consumption biases—they are not immediately relevant to the questions of fiscal sociology focused on in this paper.

The same cannot be said of the PA’s domestic tax revenues, however. To the contrary, this stream of income reveals an incredible amount about the state’s role in the construction of the West Bank’s contemporary class structure.

Class and the Income Tax

The social properties of the PA's domestic taxes are most easily discerned through disaggregating the annual tax yield according to its component parts. Herein, one is immediately struck by the dearth of revenues generated through either direct income taxes or through taxes on wealth and property. In 2019, receipts derived from taxes on corporate profits and individual earnings amounted to just $197.3 million, or roughly 6% the PA’s total tax-sourced income. That same year, property and wealth taxes, the latter of which includes taxes on inheritance and financial/capital transactions, contributed only $80.1.

Such figures are largely in keeping with the trends of the past five years.¹ They are the product, moreover, of an income tax code highly biased against the lower classes—and a tax administration that largely acquiesces to elite tax avoidance/evasion schemes.

On the tax code itself, though the rates applied to corporate profits were low and non-progressive since the inception of the PA, business friendliness was enhanced further during the tenures of Salam Fayyad and his successor, Rami Hamdallah. Through the reforms installed under each man’s leadership, by 2016, the tax rate on corporate profits had been flattened and reduced to 15%, with regime-backed oligopolists in the telecommunications and financial sectors only required to pay an additional 5% on earnings.²

Class biases similarly color the tax regime when it comes to individual income. Reforms in 2014 rendered earnings derived from capital gains wholly tax exempt while reducing the tax rate on non-wage forms of income such as dividends, stocks, and returns on microfinance investments to a flat 10%. Amendments in 2015 and 2016, meanwhile, set a maximum marginal tax rate of 15% applied to every dollar (or, technically speaking, shekel) earned above $44,100, a rate of 10% for every dollar earned between $22,050 and $44,100, and a rate of 5% for each dollar earned between $10,585 and $22,050. While those earning below the bottom threshold were made tax exempt, it is worth noting that this threshold is set at a far higher income level than is in the case for regional comparators like Jordan.

Problematic as the design of the individual income tax is from a justice-based perspective, the administration of the tax has only compounded matters further. As mentioned, at the highest levels, this follows from the Ministry of Finance's acquiescence to elite tax evasion, the pervasiveness of which can be gleaned from the Panama Papers.

It also stems from the fact that the Ministry requires all income earners to file their returns independently, with the exception of the small segment of the workforce that is formally employed and therefore subject to a payroll tax collected by their employer.³ In practice, this allows many of the West Bank’s self-employed and own account workers, who constituted 26% of the labor force in 2019 according to the Palestine Central Bureau of Statistics, to skirt the tax system entirely. While the aggregate social impact of this skirting may be ambiguous—there are many low earners amongst these categories of the labor force— it does allow a large number of small business owners doing just fine for themselves to get by without paying any tax. Seen in conjunction with the earlier point on tax evasion, the PA's administration of the income tax thereby functions to spare both the petite bourgeois and international elite any meaningful burden, reducing the tax base to the contributions of formal sector wage earners alone.  

This is clearly reflected in the data from 2019. The total yield of the individual income tax was $131.4 million, but just $59.1 of that figure came from independent filers (the remaining $72.3 million was raised from the payroll tax). Lest one take this as an aberration, in 2018, the total yield on the individual income tax was a mere $92.1, with only $20.1 of that coming from independent filers.

Class and Taxes on Consumption

If the marginal yields of individual and corporate income taxes reveal one side of the PA's class biases when it comes to revenue generation, the dependence that the Authority has developed on a series of regressive taxes levied on consumption reveals the other. Amongst these regressive measures, the value-added tax (VAT) and the excise tax attached to fuel sales—which together generated 54% of the PA’s total tax revenue in 2019—stand out as the most socially punitive.

The Palestinian VAT has been pegged to the Israeli VAT +/-2% ever since The Protocol on Economic Relations between the State of Israel and the P.L.O. went into effect in 1995. By virtue of the neoliberal transformation that afflicted Israel in the intervening period, this pegging wound up driving the VAT in the West Bank ever higher with the passage of time. Presently, it rests at 16%.

The VAT is applied on intermediate consumption (i.e. the purchases of inputs to production made by firms and organizations) in a broadly non-discriminating manner, with a handful of exemptions in place for microenterprises with less than $12,000 in annual income, NGOs, and for PA-supported projects in the fields of finance, preschool education, infrastructure, food processing, and research & development.

When it comes to final consumption—the more socially relevant category—the coverage of the VAT is universal and its application wholly non-discriminating. As a result, the same flat rate of 16% is added onto the purchase of all goods and services, be they basic necessities or luxury items. This is in contrast to many regional comparators, who continue (or until recently continued) to exempt essential items such as rice, flour, or baby formula from the VAT.

If uniform taxes on consumption always affect the poor disproportionately, then, Palestine’s VAT does so even more gratuitously. What is more, in view of how the West Bank has struggled with declining wages, growing indebtedness, and pervasive unemployment throughout the period that the VAT has been imposed, the class biases of the tax (and the excise on fuel) are even greater than would seem at first blush.

Sovereign Debt

The final element of public income that is deserving of discussion is not income at all, but the loans accumulated by the Palestinian Authority.

As I discussed in a piece for the Middle East Reporting and Information Project, these loans and the PA’s (pseudo-)sovereign debt more generally are themselves indirect functions of the income tax system, whose small yields leave the state dually reliant upon inflows of donor contributions and Israel’s regular transfer of Palestine’s customs and excise revenues (referred to as clearance revenues in most official documents). Due to these revenue sources being subject to high levels of volatility, they frequently (and unexpectedly) leave policymakers short on cash. When caught in such binds and unable to either issue bonds or borrow from the Palestinian Monetary Authority in large sums, economic policymakers must turn to credit markets in order to fill gaps in the budget.

Prior to 2011, this primarily resulted in the accumulation of low-interest, long-term debts issued by (regional and international) institutional lenders. After banking reforms passed under Fayyad’s direction, however, the PA’s borrowing has increasingly concentrated in locally issued, short maturity/high-interest loans.

As of March, these domestically originating loans had risen to constitute 55% of the PA’s total debt portfolio, all of which is owned by the fourteen commercial banks allowed to operate in the oPt. In nominal terms, the Authority’s aggregate debts to these actors now exceeds $1.5 billion, with $900 million of the short maturity, high-interest variety (4-6.5%) just detailed.

The social costs of these debts are steep and multifaceted. Most immediately, repayment and servicing obligations squeeze the PA’s fiscal space and in so doing, indirectly contribute to cuts in development and social spending (as will be detailed in the next section). Seen as a single transaction, the PA’s debt strategy thereby facilitates flow of moneys to the banks (at high interest) and away from the poor, which amounts to an upward transfer of wealth. In addition, to the extent that it is ultimately the Palestinian citizenry who foot the cost of the PA’s borrowing through current and future taxes—taxes, mind you, that are broadly regressive in nature and disproportionately extractive of lower and middle class income—these upward transfers are more pronounced than appears.

In total, then, the revenue strategy of the PA is one both punitive of the poor and middle classes and one propitious for the rich. Intensifying inequality and spreading impoverishment, it has consolidated the social polarization already produced by Palestine’s markets.

The Spending of the Palestinian Authority

If the sociological character of the PA’s revenue strategy evinces rather clear class biases, the character of its expenditures is slightly more ambiguous. Nevertheless, there is much that can be gleaned about power, poverty, development, and the social order by taking a look at the Authority’s spending.

The vast majority of the PA’s spending is allocated towards to what are classified as current expenditures, which, broadly speaking, refer to the recurring payments a government must make in order to stay in operation. In the Authority’s case, these expenditures reduce in large part to the public sector wage bill and the pension obligations owed to state employees. A vast, vast majority of these state employees work for either the Ministry of Education or for one of the five institutions constituting the security sector in the West Bank today (The General Intelligence Service, Preventive Security Service, Palestinian National Security Forces, Presidential Guard, and Palestinian Civil Police). Rounding out what remains of the budget are more discretionary outlays designated for social protection and health services.

The most immediate opportunity cost associated with these budgetary allocations concerns the wholesale neglect of capital and development spending.

Specific to the former, with the partial exception of the spending devoted to the construction and maintenance of government buildings and structures—$182.2 million in 2019—the PA has foregone substantive investment for the better part of two decades. (Expenditures on infrastructure and the like are almost entirely contingent upon the availability of specially earmarked donor contributions). As for the latter, for the period between 2011 and 2019, annual financial support for the development of agriculture, forestry, fishing and hunting never once exceeded $43.1 million. During that same period, mining, manufacturing, and construction received between $0-17.1 million in public moneys, with most years skewed towards the bottom figure. Basic research and R&D, meanwhile, were allocated in the area of $6 million per year, and environmental protection (inclusive of waste management services) garnered between $3.3-4 million per annum.

Despite the West Bank’s profound shortage of housing and the dearth of affordable accommodation options in the major commercial centers, it is also worth emphasizing that the PA has been content to cede development to the private sector and the Palestine Investment Fund, the Authority’s pseudo-sovereign wealth fund. Official government spending on housing development has stayed within a tight corridor of $25-29 million annually.

Though the distribution of public moneys detailed above hints at the social, political, and ideological properties of the state’s expenditures, these properties are more easily discerned through dissembling individual line items.

The PA’s Health Expenditures

The annual outlays of the PA’s Ministry of Health have fluctuated between $354 million and $629 million for the past five years, with the figure registered in 2019—$588 million—therefore sitting at the upper bounds of recent trends.⁴

To set these numbers in context, per Jehad Harb, the Ministry’s annual share of gross health expenditures in the oPt is in the area of 40%. This is roughly equivalent to the share attributed to out-of-pocket household spending. (Non-profits, meanwhile, finance roughly 12% of the total, with private insurance contributing a mere 3.4% as of 2017.) Regardless of how much the Ministry spends on purchasing or providing care, then, this distribution establishes that families already squeezed by labor market failures are nevertheless being forced to carry a significant portion of the cost burden.

As regards who the available public moneys are spent upon, the Ministry provides all Gazans with non-contributory insurance (with the exception of those still on the PA’s payroll, who pay insurance premiums out of their paycheck). As of 2018, an additional 86,000 poor families in the West Bank were included in this non-contributory scheme. Specific to the premium paying public sector, the insurance coverage extended by the Ministry includes an employee’s immediate kin.

While the who of the Ministry’s spending suggests a somewhat socially progressive outlook, the how of that spending paints a slightly different picture.

Due to deficiencies in the public health system’s internal capacity—principally, a lack of government facilities and a lack in the testing, treatment, and care those facilities can provide—the Ministry is forced to spend a large share of its annual budget on purchasing health services from outside institutions on the behalf of those in the public insurance system. Most years, in fact, payments to external providers eat up more than 40% of the Ministry’s total budget.

This outsourcing of public healthcare has created two issues of note. The first is inflated expense. If the mandate of a public hospital is devoid of any considerations related to profitability, the same cannot be said of privately owned facilities—quite the opposite in fact. Disciplined by neither institutional nor market imperatives when it comes to pricing, these domestic facilities can (and have) subsidized their margins by charging the Ministry well in excess of the costs incurred via service provision. Indeed, the bills charged by private providers are such that even those care recipients covered under the Ministry’s insurance system (premium paying or not) still often need make substantial out-of-pocket payments.

In this same vein, one need also note that due to a number of variables introduced by the Israeli occupation, private hospitals and facilities in the West Bank (like public ones) often lack the resources and equipment needed to provide treatments of the most technologically advanced variety. In such circumstance, the PA is forced to send those covered under its Health Insurance Fund across the greenline and into Israeli hospitals. This too has allowed price gouging at the Ministry’s expense, especially when one considers that the Ministry has never once audited the bills submitted to it by Israeli service providers.⁵

The second issue with outsourcing public healthcare concerns corruption. As many doctors and pharmacists work both at public and private facilities, there are opportunities for individuals to funnel a patient initially seen at Ministry-run hospital to the external business where they are either owner or employee. Such practices have been documented, and are prevalent enough that the Ministry of Health is viewed as the most corrupt institution of the PA (in a tie with the Ministry of Finance).

The PA’s Expenditures on Social Protection

Short of the point on corruption, the PA’s spending on social protection reflects the same tendencies—nominally good intentions mixed with limited impact—as does its spending on health.

Administered by the Ministry of Social Development, $497 million was allocated for social protection in 2019, marking a slight decline as compares to recent years. Though financing a variety of services and benefits extending from microenterprise incubation to support for orphaned children, the majority of the PA’s spending on social assistance is devoted to its Palestinian National Cash Transfer Program (PNCTP).

While not without its merits, the PNCTP leaves a great deal to be desired. First, as detailed by Leila Dal Santo and myself, despite the pre-Covid poverty rate reaching 29.2% in the oPt, only 121,000 families were receiving PNCTP transfers as of this spring. (For context, prior to the economic crisis triggered by the coronavirus, 200,000 families had been deemed “eligible” for these transfers. Since then, economists have estimated that another 100,000 have fallen below the poverty line). Second, the PNCTP is undermined not only by undue exclusivity but by the inadequacy of assistance as well: the program aims only to bridge the poverty gap by 50%, meaning that it is explicitly designed so as not to change the poverty status of participating households. In leaving so many without protection and offering but a pittance to those fortunate enough to have access to any state assistance, the PA’s efforts in poverty alleviation fall far short of an emancipatory agenda.

The PA’s Expenditures on Security

The lack of seriousness investing the state’s social protection initiatives are made more apparent when seen in comparison with the resources and energy devoted to domestic security.

Since the inception of the PA, the state building project (presided over by the international community) has put a great premium on the establishment and maintenance of an inwardly-oriented security apparatus. 50,000 in number as of 1999 and dispersed across a number of competing hubs “all spying on each other” as Edward Said once observed, the employees of this apparatus represented the primary beneficiaries of the militarized welfarism that underpinned Fatah’s rule in the early days of the two state solution.

Following the outbreak of the Second Intifada and the disastrous coup attempt launched by Fatah (with American support) against the Hamas-elected government in 2007, the PA’s security apparatus was subjected to considerable reform. These reforms—led by the United States Security Coordinator and the European Union Coordinating Office for Palestinian Police Support—were aimed at rationalizing and professionalizing those under the state’s command so to ensure total discipline when it came to keeping the peace with Israel.

After subsequently expanding in number during the early years of Salam Fayyad’s tenure as Prime Minister, security would absorb approximately 25% the PA’s annual budgets (and 30% of all international aid) for most of the past decade. In nominal terms, from 2011 onwards, this has translated to allocations ranging from a low of $838.7 million in 2011 to a high of $1.176 billion in 2017. In 2019, security broadly defined received $950 million from the PA’s $4,342 million total budget.

With an active workforce in the area of 70,000 people⁶—and tens of thousands of others enjoying early retirements—about 80% of security’s budget is devoted to employee salaries and benefits, pensions representing the lion share of the latter. To give some sense for the scale of this securitized jobs program, the 70,000 just mentioned represents about one half of the entire public sector.

As the Geneva Centre for Security Sector Governance has meticulously documented and Alaa Tartir has conveyed, this translates to a security personnel to population ratio of 1:48. In comparative terms, the Palestinian Union of Social Workers and Psychologists reports having 9500 members, which translates to a social worker/psychologist to population ratio of 1:532.

In order to holistically determine the social (and political) character of the security infrastructure—the single, largest output of PA fiscal policy—one need weigh the positive impacts of the militarized welfarism introduced above against the negative effects thereby engendered.

Regarding the positive, as was and is the case in Jordan, Egypt, and even in the United States⁷, the PA’s militarized welfarism has constituted one of the few means through which low-educated males from surplus populations can achieve any degree of stability in the modern economy. Affording families benefits and a wage significantly above what is on offer in the private sector (and a wage magnitudes greater than what one can expect in the informal labor market, where men and women from surplus populations are most likely to wind up), gigs with guns have undoubtedly helped members of vulnerable social categories survive the neoliberal age.

On balance, however, security’s ledger tilts decidedly in the negative direction. The cost of taking care of Palestine’s surplus populations through employing them in the security forces, after all, is to render them shock troops for domestic repression and subcontractors to the Israeli Defense Forces.

Especially since the reforms of the mid-2000s, the intensification of security coordination between the PA and Israeli military and intelligence institutions has seen Palestinian security forces adopt an increasingly aggressive posture vis-a-vis recalcitrant domestic elements, be they peaceful activists or armed militants. Should one have any doubts as to the veracity of these claims, a review of the PA’s well-documented record of arresting political dissidents and cracking down on domestic challengers to Israel’s ongoing settler colonial project ought suffice to dispel them. So too might a review of the Palestine Papers, which established just how extensive the PA’s coordination and intelligence sharing with the Israeli government is—even at those times when the latter is actively engaging in war crimes against the Palestinian people in Gaza.

This being the case, whether the PA’s hiring has helped the lumpen hold on amidst a terrible economy or not, it has done so through squashing essential political liberties and compromising national self-realization. Just like any other state that has traded the immediate social gain of militarized employment against the long-term political and strategic consequences of a workforce in arms, the PA’s fiscal interventions in the security sector are deeply destructive in the final instance.

The PA’s Pension Plans

To the extent that they neatly epitomize the class biases pervading the entirety of this fiscal sociology, it is appropriate that we close this section on state spending by taking a closer look at the pension systems institutionalized under the PA’s watch over the past thirty years.⁸

The benefit scheme for the rank and file of the public sector was first formalized under Pension Law no.7 of 2005. With the adoption of amendments in 2015, this scheme is currently structured according to the following parametric criteria:

(i) a mandatory retirement age of sixty (fifty in the case of the security sector); (ii) pension subscription rates of 9%/7% for the employer and employee, respectively; (iii) a benefits coefficient of 2% per annum; and (iv) a benefits base determined by an individual’s mean salary over the last three years of employment.

Of note, this scheme also applies to non-public sector workers who have managed to secure formal employment arrangements with NGOs or a private sector firm as well.

Example Pension Calculation

Years employed: 25

Mean Salary over final three years of employment: $10,000

Pension= 10,000 * (25*.02)= $5,000

Tipping the PA’s elite-biased hand, entirely separate (and far more generous) pension systems have been established for those in political posts and in more senior administrative and judicial positions.

As detailed in a 2019 report published by Aman, beginning in 2004, elected members of the Palestinian Legislative Council (or their heirs) were to be provided with non-contributory pensions maxed at 80% their annual compensation ($36,000 for sitting members and $48,000 for the Speaker) and extending for a duration equivalent to the number of years served in office. Unlike the public sector scheme, these benefits were to be paid out directly from the Treasury (not the Pension Fund) either in dollars or in shekels (on the basis of a generous exchange rate) and automatically adjusted according to cost of living metrics. Evincing another stark difference in treatment from everyday civil servants, the benefit coefficient (or accrual rate) for members of the PLC was set at 12.5%.

Under this same 2004 law, cabinet members, the President of the State Administrative Audit and Control Bureau (SAACB), and governors were also afforded analogous (albeit upgraded) non-contributory benefit packages. The benefits coefficient for cabinet members and the President of the SAACB were set at 20% (10% in the case of governors), with maximum pensions put at 80% and 70% final salary at the time of retirement, respectively. Unlike civil servants or PLC members, these executive posts were also guaranteed a minimum pension of 50% salary to be paid out for a duration equivalent to years served in government. A 2006 law also established non-contributory pensions for judges appointed to the Palestinian Constitutional Court. These individuals too were afforded a PLC-equivalent 12.5% accrual rate along with a baseline guarantee of 50% salary at the time of retirement. Judges were also subjected to the same maximum pension (70%) as the governors.

Despite how (relatively) generous all these arrangements already were, the 2015 amendment referenced earlier lifted all those provisions that had previously maxed out the pensions of senior government officials at 70-80% salary. That same amendment allowed cabinet members to combine pension entitlements from different government posts as well. One ought also note that a 2017 reform raised cabinet salaries by 67%—and that Abu Mazen attempted to retroactively apply this pay raise all the way back to 2014. Public backlash eventually forced the Ministers to return some of their bonus compensation.

In total, though it would be unfair to suggest that the expenditure side of PA fiscal policy has intensified the class biases engendered through its revenue strategy, it can be asserted that state spending has done little to reduce those biases. To the extent that government outlays on domestic security constitute a strategic and political catastrophe, this neutral sociological effect ought give little reason for celebration.

TL; DR

To summate, the fiscal sociology institutionalized by the PA has buttressed divides of class and polarized the distribution of income, wealth, and opportunity in the occupied West Bank. So long as budgets remain structured as they are, one can expect state intervention to accentuate existing levels of inequality—and to deepen the reach of Israel’s occupation.

Footnotes

1. Revenues raised through recurrent taxes on property and property transactions totaled $80.1 million in 2019, $73.5 million in 2018, $77.1 in 2017, and $59.1 in 2016.
2. In addition, where the aforementioned amendments to the tax code benefited capital indiscriminantly, one need note that the holding companies owned by Palestine’s diaspora capitalists have also been somewhat exclusively privileged   through investment promotion policies. These policies have established a series of tax abatements targeted at foreign investors. Cynically taking advantage of     these provisions, the elite consortia registered what would become the two largest conglomerates in the West Bank economy, PADICO and APIC, in Liberia and the British Virgin Islands, respectively. By virtue of the firms’ foreign residency—and corporate structures dividing their operations across a large number of fully-owned subsidiaries—they have contributed preciously little to the state coffers for the better part of thirty years.
3. For more details, see: Naser Abdelkarim and Firas Jaber, “Fair Tax Monitor 2018”, Report produced for Miftah (2018), p.34.
4. One ought note that the PA’s health spending has consistently outpaced its revenues, the latter of which is primarily comprised of the premiums paid by public sector workers. On average, in fact, Ministry income amounts to just 17% of its spending. Though one should be weary—politically and epistemologically—of evaluating a public health system according to its balance sheet, these deficits are meaningful because of how they have contributed to the Ministry’s accumulation of enormous debts and arrears. As the Ministry of Finance is only able to cover a portion of its annual budget gaps, the Ministry of Health’s cash shortages have led to the build up of $440 million in unpaid bills to private hospitals and pharmaceutical companies as of the close of 2019. Though interest is not attached to these moneys owed, the principal itself constitutes a major stressor for the public health system, and further reveals the dangers inherent to that system’s reliance upon external service providers.
5. Between 2003 and 2012 alone, Israeli hospitals billed the PA $150 million—amounts that Israeli government officials have automatically and unilaterally deducted from the customs revenues it is meant to transfer to the PA on a monthly basis.
6. Even after forced early retirements moved more than 10,000 Gaza-based security staff off PA payroll (and into the pension system) in 2017 and 2018, more than a third of security personnel currently receiving a salary from Authority are still based in Gaza, where they have been ordered to cease reporting to work since Fatah’s 2007 failed coup attempt. The ongoing cost of this hapless protest to the PA is approximately $40 million per month in salary and pension payments—extending for more than 13 years now, the aggregate bill of the Authority’s stay-at-home security mean is over $5 billion.
7. In the United States case, this welfarism is offered not to the state’s soldiers but to the employees of police departments, the Department of Homeland Security, ICE, and the like.
8. In discussing the Palestinian pension system, one need note that upon the PA’s establishment in 1995, the leadership made the decision to integrate those formerly employed by the various appendages of the Palestinian Liberation Organization (PLO) and those 22,000 individuals on the post-occupation payrolls of the Jordanian and Egyptian civil services in the West Bank and Gaza, respectively, into the Authority’s new pension system. Due to the impossibility of retroactively collecting subscription dues from these individuals, it was also decided to grant these individuals non-contributory benefits paid out by the state treasury.