Israel, Palestinians reach deal on tax transfers

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Associated Press

Posted on August 1, 2012 at 6:00 AM

Updated Wednesday, Aug 1 at 6:01 AM

RAMALLAH, West Bank (AP) — Officials say Israel and the Palestinians have reached a deal on improving Israel's collection of customs and taxes on behalf of the Palestinians.

The deal could help ease the Palestinians' deep financial crisis, though there were no estimates of how much additional revenue it would bring.

It was reached after months of talks and came despite distrust between the two sides on many issues, including terms for resuming negotiations on Palestinian statehood and peace.

Israel's monthly transfers of about 500 million shekels ($125 million) are a key source of income for the Palestinian self-rule government. However, the Palestinians believe they are losing revenue because of underreporting.

Palestinian government spokesman Ghassan Khatib said Wednesday that under the new arrangement, Israel will share information about economic transactions to improve the tax collection.

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