On Thursday, 27 December 2018, Al Mezan Center for Human Rights organized a specialized workshop to discuss the implications of newly-imposed import taxes. Organized at Al Mezan’s office in Gaza City, the workshop was joined by representatives from the Ministry of National Economy (MNE), the Palestinian Federation of Industries, and the Chamber of Commerce, as well as academics from Palestinian universities and NGOs professionals.

The workshop was focused on explored the implications of the recent decision by MNE requiring that traders wishing to import goods into Gaza apply for authorization first and then pay new taxes on some imported goods. Participants in the workshop discussed the effects of the new decision on economic activity, prices, and living conditions in the Gaza Strip, as well as the potential steps to be taken to protect local products, support the private sector, and enhance the gross domestic product.

Mr. Hussein Hammad, from Al Mezan’s technical assistance unit, welcomed participants and introduced them to the work of Al Mezan in promoting the economic, social, and cultural rights of Palestinians in order to ensure access to adequate living standards.

Mr. Issam Younis, Al Mezan’s director general, shared an overview of the general circumstances and economic conditions in the Gaza Strip, and he explained the negative impact of Israel’s restrictions on movement of goods from and into Gaza. “Israel’s blockade has profoundly affected the living conditions of the population in Gaza,” Mr. Younis said. “As the economy continues to deteriorate, rates of poverty and unemployment have grown dramatically, leaving the labor force at severe disadvantage.”

Mr. Younis stressed the need to support the private sector in Gaza as main partner in development activities. He also discussed customer protection against scarcity of goods and inflamed prices, especially at a time of ongoing, far-reaching Israeli violations of people’s rights.

Next, Mr. Basem Abu Jrai, from Al Mezan’s technical assistance unit, elaborated on the new MNE’s decision, explaining it involves the imposition of taxes on 95 types of goods, some of which have no alternative in Gaza’s local market while others are considered key inputs into local production. Mr. Abu Jrai concluded that the new taxes would increase pressure on traders, who already suffer from double taxation.

“Employment has reached 54.9%, and 53% of families have relied on loans, debts, and/or advance payments,” Mr. Abu Jrai explained. “69% of families in Gaza have sought food and/or financial assistance, and 36% have lost part or all of its income. Gross domestic growth in Gaza dwindled by 8% compared to the first three quarters of 2017, according to the Palestinian Central Bureau of Statistics. The number of closed factories in Gaza has reached 470. These are but a few indicators of the grim economic situation in Gaza, which requires additional government spending.”

Participants in the workshop shed light on how additional taxes halt development of economic and industrial activities, and they referred to some urgent interventions needed to reverse deterioration in Gaza’s economy. One key point they shared was the multiplicity of parties controlling the Kerem Shalom crossing and the resultant challenges to export and import activities.

At the end of the workshop, the following recommendations were shared by participants:

• -- Newly-imposed taxes on imports should be frozen, and alternative policies of comprehensive protection of local products should be pursued, such as increasing grants and abiding by the law in imposing new taxes.
• -- Challenges to commercial activity should be defied, including through ensuring products of Gaza are accessible to the market in the West Bank without any restrictions as the two regions are part of the Palestinian territory.
• -- Policies of tax returns and efficient permission approval should be activated, and electricity costs should be subsidized to reduce production costs and thus both improve customer’s purchasing power and enhance the competitiveness of local products.
• -- The role of customer protection organizations should be enhanced, including through active engagement of private sector actors and economic decision-makers as well as through launching public campaigns to raise awareness of economic issues.