Israel Easing Tax Burden Restrictions in Territories

Israel will ease restrictions on the administered territories be cause of the considerable decrease of intifada violence in recent months, defense sources say.

The relaxation includes financial burdens as well as ending body searches of Palestinians crossing the Allenby Bridge.

Income tax reforms for the territories have already been approved by the Finance Ministry, the Israeli daily Ha’aretz reported Wednesday. The upper tax bracket will be reduced from 52 to 48 percent, the prevailing level in Israel proper. There are plans to further reduce taxes to benefit to lowest income brackets.

But the defense establishment, which administers the territories, has still not decided how to deal with the substantial aid which the Brussels-based European Community has approved in Principe to improve economic and social conditions in the territories.

The E.C. Executive Commission recently allotted $12 million to improve social and economic conditions the west Bank. In addition, the Palestinians will receive food aid from the E.C. in the amount of $9.5 million.

In March, the E.C. approved a $210 million loan to Israel and a $90 million grant to the Palestinians, both to compensate for damage and losses incurred during the Persian Gulf War.

The E.C. conditioned its aid to Israel on Israel’s acceptance of a European representative to the territories with diplomatic status and the authority to supervise the distribution of the grants in the territories.

Israel’s Defense and Foreign ministries are strongly opposed to those conditions, on the grounds they would imply diplomatic recognition of some future Palestinian entity. The grant is still far from soon to discuss the problem.

Nevertheless, 59 small enterprises in the territories have served notice that they will apply for grant money. Maj. Gen Danny Rothschild, coordinator of government activities in the territories. said Tuesday that there is concern that some of the money may be used to finance intifada activities.

He warned that the E.C. would be held responsible if murders or other violence were to occur as a result of competition for grants.

Meanwhile, Ha’aretz reported that the security authorities decided to cease body searches of Arabs crossing the Allenby Bridge from Jordan into the West Bank.

Rothschild was quoted as saying that in the age of fax machines it was useless to search people for hidden messages.

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