JERUSALEM (AFP) - Israel said its security cabinet on Sunday (Feb 17) decided to withhold US$138 million (S$187 million) in tax transfers to the Palestinian Authority over its payments to prisoners jailed for attacks on Israelis.
A statement from Prime Minister Benjamin Netanyahu's office said the withheld cash would be equal to that paid by the PA last year to "terrorists imprisoned in Israel, to their families and to released prisoners".
Israel alleges the payments encourage further violence.
The PA says the payments are a form of welfare to the families who have lost their main breadwinner and denies it is seeking to encourage violence.
Many Palestinians view prisoners and those killed while carrying out attacks as heroes in their conflict with Israel. Palestinian leaders often venerate them as martyrs.
The move to withhold the money comes in response to an Israeli law passed last year allowing it to do so.
Israel collects around US$127 million a month in customs duties levied on goods destined for Palestinian markets that transit through Israeli ports, and then transfers the money to the PA.
Earlier this month, Netanyahu pledged to implement the law after a deadly Palestinian attack on a young woman.
He is running in an election scheduled for April 9, and has been seeking to shore up his security credentials in the eyes of voters ahead of polling day.
The US$138 million will likely be deducted incrementally over a 12-month period, according to local media reports.