US Considers Redirecting Withheld Palestinian Tax Funds to Trump’s Gaza Reconstruction Plan

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Jerusalem: The United States is considering asking Israel to redirect part of the Palestinian tax revenue it has withheld from the Palestinian Authority toward funding President Donald Trump’s post-war reconstruction plan for Gaza, according to sources familiar with the discussions.

The proposal would involve transferring some of the funds to the U.S.-backed “Board of Peace”, an international body established under Trump’s broader Gaza recovery initiative. Officials said the money could also partly support a transitional Palestinian administration in Gaza if certain political and financial reforms are implemented.

Under existing agreements, Israel collects customs and tax revenues on behalf of the Palestinian Authority and transfers the money monthly. However, Israel has withheld billions of dollars in recent years over disputes surrounding payments made by the Palestinian Authority to prisoners and families of Palestinians killed in conflict with Israeli forces.

The discussions come as the Palestinian Authority faces a severe financial crisis, struggling to pay salaries and maintain public services in the occupied West Bank. Critics argue that diverting the funds to the Gaza plan could further weaken the Authority politically and financially, especially since it was reportedly excluded from key negotiations surrounding the reconstruction initiative.

Trump’s Gaza plan, estimated to cost around $70 billion, aims to rebuild the war-ravaged enclave through international oversight, infrastructure projects and phased security arrangements. However, implementation has faced repeated delays due to ongoing fighting, disputes over Hamas disarmament and broader regional instability linked to the Iran conflict.

Neither the White House, the Israeli government nor the Palestinian Authority has publicly commented on the reported proposal.

Pic Credit: AFP