Israeli Finance Minister Bezalel Smotrich attends an inauguration event for Israel’s new light rail line for the Tel Aviv metropolitan area, in Petah Tikva, Israel, Aug. 17, 2023. Photo: REUTERS/Amir Cohen

Israel’s Finance Minister Bezalel Smotrich and Defense Minister Yoav Gallant have found themselves in a public spat over the release of 680 million NIS (about $171 million) in tax collections to the Palestinian Authority (PA) in Ramallah this month.

Under the current system in the West Bank, Israel collects tax payments for goods and transfers and pays them out to the PA. This includes tax refunds on labor by Palestinian workers.

It is estimated that these payments make up 65 percent of the PA’s annual budget.

Smotrich — who made headlines earlier this year for freezing funds to Arab communities in Israel, including special programs for Arab residents in East Jerusalem — has been against the transfer of money in part due to the PA’s refusal to condemn Hamas, the Palestinian terrorist group that rules Gaza, for its Oct. 7 invasion of Israel. During the onslaught, Hamas terrorists killed more than 1,400 people, mostly civilians, in the deadliest single-day massacre of Jews since the Holocaust.

Smotrich has also opposed transferring the funds because of the PA’s “pay for slay” program, which makes official payments to Palestinian prisoners held in Israeli jails, the families of “martyrs” killed in attacks on Israelis, and injured Palestinian terrorists.

Meanwhile, Gallant, who has been leading the country’s war efforts against Hamas in Gaza, has publicly called for the immediate release of the funds to the PA.

“It is appropriate to transfer the funds to the Palestinian Authority immediately so they will be used by its forces and by sectors … that are dealing with the prevention of terrorism,” Gallant said at a press conference on Wednesday.

Security officials have cautioned Smotrich against freezing the funds, as much of the money goes towards maintaining law and order in the West Bank — an area that Israel takes part in but is mainly the responsibility of the PA. They warn that if the payments are not made, security could spiral out of control, especially in a time of war.

According to Israeli government sources, Prime Minister Benjamin Netanyahu ordered Smotrich to release the funds, but the finance minister has refused.

The Israeli cabinet is set to vote on the matter on Thursday evening, and is expected to vote in favor of releasing the funds.