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  • Two girls cry after their sister Mamdoh Abaid was killed in an Israeli airstrike.

    Two girls cry after their sister Mamdoh Abaid was killed in an Israeli airstrike. | Photo: EFE

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Palestinians argue the cuts are a form of collective punishment.

Israel will reduce monthly transfers of tax collected on behalf of Palestinians in what aides to Prime Minister Benjamin Netanyahu described as a response to the killing of two Israelis in Palestinian attacks in the occupied West Bank this week.

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The amount deducted from about US$130 million sent to the Palestinian Authority, PA, each month will be equal to stipends it pays militants in Israeli prisons and the families of jailed or slain militants, Netanyahu's office said Friday.

The move, which follows the killings of an Israeli man and girl in the West Bank this week, will be a blow to the already weak finances of the Palestinian Authority.

"Incitement and payouts to terrorists and their relatives constitute an incentive to murder," Netanyahu's office said in a statement announcing the funding cuts, effective immediately.

Under interim peace deals from the 1990s, Israel collects tax revenues on behalf of the PA, which exercises limited self-rule. The monthly duties currently amount to between US$130 million and US$155 million, Israeli and Palestinian officials say.

The cash is crucial to running the PA and paying public-sector salaries. Israel withheld tax money in 2012 and 2015 in response to Palestinian moves for statehood recognition abroad.

Palestinians condemn such measures as collective punishment, which Netanyahu's have been accused of time and time again by human rights groups. Recently, Tel Aviv stopped Palestinians from visiting al-Aqsa mosque during Ramadan while it continues to cut off water supplies to the West Bank.

"The decision to freeze a part of the tax revenues is a theft and piracy of money that belongs to the Palestinian people," Wasel Abu Youssef, a senior official with the umbrella Palestine Liberation Organisation, told Reuters.

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Friday's statement by Israel did not specify how much money it would now cut. That may depend on whom it deems militants.

According to retired Israeli intelligence official Yosef Kuperwasser, in 2015 the PA paid out around US$13.4 million a month to the next-of-kin of "martyrs"—a term it applies to all Palestinians killed by Israeli forces.

PA officials did not immediately confirm that account.

One PA official, speaking on condition of anonymity, said the PA also now pays some US$10.9 million each month to Palestinians jailed on charges ranging from murder and espionage to stone-throwing, fund-raising for banned groups and inciting against Israel on social media.

Were Israel to deduct both sums fully from the monthly tax handovers, that would potentially‮ ‬constitute a cut of between 16 percent and 18 percent.

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