Hamas’ Taxation is Pushing Gaza’s Residents to the Brink

Rather than caring for the welfare of the residents of the Gaza Strip, over the past years, Hamas has increased the tax burden on Gazans through a complex mechanism of taxes, which are being exploited to pay off their workers

​It takes a payment of 700 NIS to import furniture from Israel into the Gaza Strip through Kerem Shalom Crossing, it costs 300 NIS to smuggle a suitcase through the illegal tunnels between Gaza and Egypt, and there’s a 100 NIS toll for trucks who cross through Salah al-Din road, which crosses through the Gaza Strip – these payments are just a small example of the complex system of direct and indirect taxes that Hamas has imposed upon the Palestinian population of the Gaza Strip. In the past years in light of regional changes, Hamas has begun to rely mostly on domestic income, and thusly has significantly raised and diversified taxes on locals. Residents of the Gaza Strip, especially businessmen and merchants, will continue to pay large amounts of taxes to Hamas. To further clarify, currently, Hamas’ collects $100 Million in taxes monthly, with the vast majority of the monies going to pay Hamas official’s salaries, and not to taking care of the needs of Gaza’s residents. One can see how Hamas has gradually and constantly raised and expanded taxes while evaluating the merchant’s response to these increases in order to silence opposition to the taxation.

 

The “Solidarity Tax”: Just another income for Hamas

After the violent takeover of the Gaza Strip in June of 2007, Hamas based its funding on the illegal tunnels industry but had difficulties alleviating the economic hardships. The economic situation has become even worse following the Middle East turmoil in 2011 and reached a low point during the overthrow of the Muslim Brotherhood regime in Egypt in July of 2013. During this period, Hamas reached a strategic decision to change its economic state by primarily relying on taxation of domestic revenue instead of foreign aid and smuggling. The first step was signing a reconciliation agreement with Fatah in April of 2014, which led two months later to the establishment of a unity government. The agreement didn’t last for too long because of the continuation of the internal Palestinian conflict, also over the payment of Hamas workers’ salaries. In July 2014 Operation Protective Edge was launched, and a new reality has been created. Several months later In April 2015 Hamas promoted a new economic plan which was characterized by the imposition of a new tax called “The Solidarity Tax”. Hamas had claimed that this new tax will help the poor of the Gaza Strip, however, in practice, most of the profits from the taxes have been transferred directly to the salaries of Hamas workers. At the same time, Hamas has been imposing new taxes on the Strip’s residents, both directly and indirectly, in addition to improving and expanding old taxes as well.

The most recent burden that Hamas has imposed on the residents of Gaza, with the aim of gaining more money delivered to it’s own pocket, is forcing merchants to pay off their taxes and debts before being allowed to leave the Strip. In February of 2017, Hamas released a new directive regarding the exit of businessmen and merchants from the Gaza Strip through Erez and Rafah crossings. The new directive stated that it was incumbent upon these businessmen and merchants to provide official documentation stating that they had settled their payments and debts with relevant government and local authorities before leaving the Strip. In addition, Hamas recently attempted to impose new taxes on construction materials, but the move was thwarted after rising resentment by Gaza’s importers and Israel’s threat to completely halt the import of construction goods to the Gaza Strip.

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100 millions’ worth of taxes

These days, Hamas is in the midst of an economic plan to increase their profits from taxes with the sole intent of using the profits for salary payments. In 2016, Hamas’ average monthly earning from taxation stood at 60 Million NIS, yet in February 2017, the profits from taxes already stood at about 100 million NIS, with the vast majority of these monies going to Hamas’ pocket rather than taking care of Gaza’s people in need.

This complicated tax mechanism that Hamas has created and broadened directly influences the lives of Gaza’s residents. For example, custom fees combined with a special tax on cigarettes and tobacco products, which are smuggled through tunnels, reach 50% of the total price. The customs paid for a pack of cigarettes is five NIS, and according to estimates, residents of the Gaza Strip smoke about seven million packs of cigarettes each month. This means Hamas could earn 35 Million NIS each month on exploiting cigarette smokers. It is important to add that Hamas collects whatever taxes they wish at the crossings between Israel and the Gaza Strip. For example, importers who bring their products from Israel through Kerem Shalom crossing into the Gaza Strip must pay Hamas 50 NIS for every electrical appliance, 100 NIS for every ton of fruits or vegetables and up to 300 NIS on toy shipments. At the Erez crossing, Hamas collects various taxes, beginning with incoming mail, and a toll for driving to and from the crossing. These far reaching taxes have even affected real estate as well. Not only is the rate of construction in the Strip down, and not rising as expected, but Hamas’ so called Land Authority collects from Gazan real estate agents 17% from each deal.

Silencing the Gazan residents does not help

Palestinian residents of the Gaza Strip have not remained indifferent to the economic hardships in Gaza, and occasionally, residents have even dared to speak out against Hamas and the economic abuse being carried out by the terror organization. Take, for example, in January of 2017, when protests against Hamas broke out in the northern Strip due to the electricity crisis in Gaza. Up until now, protests have yet to break out against Hamas’ oppressive taxation policy because Hamas has quelled every protest attempt. However, an interesting remarks was made by a businessman from Gaza in June of 2016. In an interview with an international news corporation the businessman stated that “I used to import tens of food items from around the world, but in the last two years Hamas makes it almost impossible to make a profit because of the high taxes they imposed”. Also the international community is disturbed by Hamas’ taxation policy. In May 2015, Nikolay Mladenov, U.N. special coordinator for the Middle East peace process, wrote in his website that the residents of Gaza is angry with Hamas for imposing a “solidarity tax”. It should be made clear that in accordance with previous agreements, Israel collects the monies on import taxes to Judea and Samaria and the Gaza Strip and then transfers it onto the Palestinian Authority. This is how merchants from the Gaza Strip are being exploited and are forced to pay a triple tax, while being burdened by Hamas’ heavy taxes, which only keep on rising.

With all this in mind, it can be clearly seen how Hamas has changed its economic policy and has chosen to depend on profits from internal sources and most importantly from exploiting taxes. Accordingly, Hamas has decided to collect and gradually raise taxes, while examining the responses from residents and merchants in order to silence internal criticism. While there are objections to the economic policy, which is reflected by the statements of businessmen against the current policy in the Strip or at public protests, Hamas chooses to ignore the current situation and to marginalize and dismiss the symptoms of the protests. Additionally, the terror organization explains the that taxes are intended to be imposed on wealthy residents such as merchants and businessmen. However Hamas harms the poor, being that the collected money is not intended for them but for Hamas members, and the taxes indirectly affect the products that most Gazan residents purchase.