A statement released by the Democratic Front for the Liberation of Palestine about the financial crisis of the Palestinian authority

A statement released by the Democratic Front for the Liberation of Palestine about the financial crisis of the Palestinian authority

· Financial crisis due to occupation, Paris agreement and policies of successive governments.

· Reducing dependence on foreign aids is a national necessity in facing pressures, American and Israeli blackmails

· Yes to the rationing of government expenditure, stopping over-expenses of the authority institutions, including security agencies.

· No to the early pension.

· Yes to the reduction of taxes on main commodities.

· Yes to the justice of distributing the tax burden trough the progressive tax system, exempting farmers and golden handshakes from taxes and combating tax evasion.

· Calling for targeting the priorities of the budget in favor of improving basic services, supporting agriculture and national production.

· Calling on the government to endorse the minimum wages, adopting the social and health insurance law and endorsing the national fund of academic learning.

The politburo of the Democratic Front for the Liberation of Palestine studied the tense current economic position on the light of the aggravation of high prices and the increase of the authority’s financial crisis, in addition to the violent dispute about the latest political and financial measures adopted by the Palestinian government. We reached the following conclusions:

First: The Democratic Front for the Liberation of Palestine (DFLP) welcomes the call for a national dialogue about the political and financial policies of the government, and calls for accelerating this dialogue. It is to be noted that the DFLP called for the widest popular and parliamentary participation in this dialogue about these policies with the aim of reaching the maximum rate of the social consensus. It also called for enabling the Legislative Council, represented by all the parliamentary blocs, to play its full role in endorsing these policies and considering the 2012 budget before it is accredited.

Second: The DFLP believes that the current financial crisis of the Palestinian authority is a result of the destructive policies and unjust restrictions dictated by Paris agreement, in addition to the fruitless social and economic policies of the successive governments which failed to enhance the national economy in face of the Israeli occupation policy. Instead, these policies increased the disclosure of the Palestinian economy to the outside world, fixed the subordination to the Israeli market and deepened the dependence on foreign aids even in the direct funding of the current budget of the authority. It also deepened the class differences, increased the agony of the poor and middle classes who suffered from the escalating prices and bearing the largest scale of the tax burdens.

Third: It is a necessary step to decrease the dependence on the foreign aids in financing the current deficit of the budget to put the economic and financial policy in the right path. Belittling this approach under the pretext of forcing the international committee to hold its responsibility towards our people, or under the pretext of not holding Israel responsible as an occupying force replaces the facts with the wishes and ignores the bitter reality that the foreign aids are used by the donors, especially the USA and some countries as pressure tools on the Palestinian Authority to have its political decision affected and weakens the cohesiveness of the Palestinian society. On the other hand, the control of Israel in transferring or withholding money is used as a blackmailing tool by it, which makes the task of releasing the Palestinian political decision from these pressures and blackmails a top national task, especially in the light of the inflammatory confrontation with the occupation and its protectors,
the Americans. This confrontation is expected to increase in case the Palestinian and political attack is resumed on the international level.

Fourth: The first step, which is the most important towards the reduction of budget deficit, is represented in rationing the governmental expenditure and putting an end to the luxurious appearances, especially with regard to the costs of travel allowances, privileges of senior officials and costs of purchasing and renting real-estates. However, the latest measures taken by the government are steps on the right path, but it is necessary to widen these measures to include the rationing of the operating costs of the security agencies and putting an end to the privileges and waste.

Fifth: The Democratic Front reaffirms its warning from the dangers of the early pension of the officials. Although these proposals have not been approved yet, its being under circulation or under discussion creates tension and unrest in the government body and results in passive social effects. Instead of the proposals of the early pension, the Democratic Front called for preparing a studied program for rehabilitating the officials of the authority and re-distributing them in a way that meets the needs of the ministries and other departments, and keeps the right of the official to voluntarily choose early pension or not.

Sixth: Since the emergence of the financial crisis when the government was unable to pay the salaries of June last year, the DFLP renewed its call for reconsidering the tax system in a way that exempts low-income people and endorses aggressive taxes on high-income people, including profits gained out of speculation or real-estate deals. The amended presidential law of income tax of 17/9/2011 and the decisions of the cabinet of 1/1/2011 participate in realizing more justice in distributing the burden among all the classes of the society and help correct the tax proceeds by increasing the income tax rate in comparison with the indirect taxes which affect the poor classes of low income. Indirect taxes form 94% of the total revenues of the authority.

The amended law according which the decisions are issued includes a full tax exemption for every 2500 shekels a month. Other exemptions reaching 1300 shekels included any settled housing loan or any university installments. There were also many reductions for law and middle incomes (2500 – 13000 shekels a month) versus aggressive taxes on the profits of the companies and high incomes which exceed 13000 shekels per month. This proves that the claims that the proposed increase of taxes has effects on low-income people are baseless. On the other hand, the claims that there will be a arise in prices are also baseless. Consequently, the new law of taxes will not reflect be reflected on the price levels as the case with the indirect taxes.

The DFLP confirms that the principle of the aggressive tax according to the concerned scale of tax rates is a step in the right direction which all progressive powers should support. However, we confirm at the same time that it is necessary to amend the new law of income tax in a way that guarantees the re-exemptions granted to the farmers and the golden handshake, in addition to the partial exemption out of the speculations and real estate deals. On the other hand, the Democratic Front calls for taking strict measures for combating tax evasion, especially that which is done in collusion with the occupation authority by manipulating with value of the clearing bills of due money of the Palestinian Authority.

Seventh: In contrast with the correction of the income tax system, and in light of the exacerbation of high prices, the DFLP calls on urgent measures for alleviating the burden of the indirect taxes on the main commodities such as bread and fuel. Alleviating this burden is possible and necessary through the government subsidization of prices.

Eight: The DFLP call for reconsidering the priorities of the public budget in a way that guarantees the allotment of the largest share of the available revenues for developing the health care and educational services, municipal and social services, supporting agriculture and all national productive sector and supporting those who are damaged by the practices of the occupation. The DFLP also focuses on the necessity that the National Council represented by its parliamentary blocs must play the full role it is entrusted to do in endorsing the budget of 2012 before it is accredited.

Ninth: The measures mentioned form a step on the path of correcting the political and social policy of the government. And they must be completed by other brave steps treating the issues of poverty and marginalization our people are suffering from. Here we emphasize on the following minimum steps to be taken by the unions and progressive powers to put pressure on the government in order to be endorsed:

a- Putting a minimum rate to the wages fit to the rise of the costs of living by the immediate activation of articles 86 – 89 of the labor law.

b- Endorsing a comprehensive social assurance system and health assurance through an independent national fund supervised by a fair administration elected from the beneficiaries who are included in this system.

c- Endorsing and implementing the law of the national fund of high learning which has been consensually accredited by all the parliamentary blocs, and can meet the high cost of academic learning.

The DFLP calls on all Palestinian powers which are faithful to the national interest, especially political powers and unions which defend the right of laborers, officials, farmers and all the poor and marginalized classes to be aware of mixing cards and deforming the facts and concepts. We also call them to unify their stances according to a feasible program for correcting the political, economic, social and financial policy to put pressure on the government to adopt it in a way that guarantees the steadfastness of our people in the face of foreign pressures and the measures of the occupation, in addition to realizing justice in distributing the burden among all classes.

The Democratic Front for the Liberation of Palestine
January 29, 2012


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