Israel's Cabinet decided Thursday to deduct the money earmarked for the Gaza Strip and Palestinian prisoners from the tax funds to be transferred to the Palestinian Authority (PA).
"The Political and Security Council of Ministers decided to deduct the funds allocated to the Gaza Strip from the Palestinian clearinghouse, in addition to the funds paid to the detainees and their families," the Council of Ministers said in a statement received by Anadolu.
"Israel is cutting all contact with the Gaza Strip. There will be no more Palestinian workers from Gaza, and the workers who were in Israel on the day the war broke out will be returned to Gaza," it added.
The tax revenues-known in Palestine and Israel as maqasa-are collected by the Israeli government on behalf of the Palestinian Authority on Palestinian imports and exports and Israel in return earns a commission of 3%.
The revenues are estimated to total around $188 million every month and represent the main source of income for the PA.
On Monday, Israeli Finance Minister Bezalel Smotrich ordered the freezing of the Palestinian funds, a decision backed by far-right National Security Minister Itamar Ben-Gvir, who argued that the PA is not an alternative to Hamas but an ally which does not deserve to receive the money.
The U.S. has been urging Israel to transfer the money to the Palestinian Authority as the subject sparked intense debate in the Cabinet, according to Israeli media.
However, Israeli Defense Minister Yoav Galant said Wednesday that the clearance funds should be transferred to the Palestinian Authority, stressing that "Israel always has an interest in stability in the West Bank."
According to Israeli reports, Smotrich abstained, Ben-Gvir opposed, and the rest of the Cabinet supported the transfer of funds.
