A tax justice lens on Palestine

Tax has been an important tool of Israel’s illegal occupation of the Palestinian territories. The denial of Palestinians’ human rights, including the right to self-determination, represents an egregious and longstanding injustice.  

There are two main tax justice aspects to consider: the role of tax in the occupation regime; and the role of tax in respect of a range of private and state parties around the world that are acting in support of either the illegal occupation or the current acts that are plausibly considered to constitute war crimes and/or genocide. This note briefly explores these two aspects. 

International law and Palestinian statehood 

The Israeli occupation of Palestinian territories since 1967 (the West Bank, East Jerusalem and Gaza Strip) has been ruled illegal under international law by the International Court of Justice (ICJ), along with any claim to sovereignty over any part of the occupied territories. Per the ICJ opinion of July 2024, Israel’s occupation regime “constitutes systemic discrimination” and breaches the prohibition of “racial segregation and apartheid.” 

In January 2024, in a case brought by South Africa, the International Court of Justice ruled that there was a plausible risk that Israel was conducting genocide against the Palestinian people. A March 2025 report to the UN Human Rights Council details “Israel’s widespread destruction of Gaza [and] disproportionate violence against women and children” after an attack from Gaza on 7 October 2023. The International Criminal Court has issued arrest warrants against Israel’s Prime Minister and then Defence Minister for war crimes and crimes against humanity.  

International calls for reconstruction and the establishment of a Palestinian state have been growing. Egypt’s proposal has been adopted by the Arab League and received backing from France, Germany, Italy and the UK, while the European Union has framed its analysis explicitly in terms of a Palestinian state. With Mexico’s statement in February 2025, 147 of the 193 UN member countries formally recognise the state of Palestine. 

Full tax sovereignty is a core component of an effective state, delivering on the rights and aspirations of its people, and should be a priority in the establishment of a Palestinian state. Tax incentives in Israel and elsewhere that have contributed to the denial of Palestinian statehood through occupation will also require to be addressed.

Tax under occupation 

When states depend more on tax than other sources of revenue for public spending, that public spending tends to be better targeted to public concerns such as health and education, more effectively spent, and the government itself more responsive and less corrupt over time. This governance dividend is why we describe tax as our social superpower: a uniquely powerful tool by which we can organise ourselves to live better lives, together.  

Tax can deliver revenues for inclusive public services; the redistribution to curb deep, overlapping inequalities; the repricing of public goods and bads such as tobacco consumption; and effective political representation, based on a powerful social contract that underpins accountable government. But under occupation since the period when most colonies began to gain independence, Palestine has remained largely deprived of the ability to exercise its own taxing rights, a process of immiseration through the denial of sovereignty.  

Since 1967, Israel has formally dominated a range of Palestinian taxes, including customs, through its exercise of military power in occupation. This has created the opportunity to limit the actions of the elected representatives of the Palestinian people, and the latter’s oversight, “underscor[ing] the pivotal role of financial control as a tool of settler-colonial domination.” UN independent experts wrote to the Israeli government in 2024 to demand an end to its punitive withholding of taxes. In April 2025, the Palestinian Authority claimed that Israel was withholding US$1.8 billion in tax revenue.

Tax incentives to occupy 

Tax has been used consistently by the Israeli state to incentivise the embedding and expansion of occupation. Studies from the Israeli human rights organisation B’Tselem (2002), the Palestinian Economic Policy Research Institute (MAS, 2012), and from US and Israeli academics (2019), show variously the scale and importance of tax incentives and other economic support to the settlements. Many multinationals as well as Israeli businesses are active in the settlements. Recent analysis by The Guardian exposes the role of Airbnb and Booking.com, for example, and the more comprehensive database of the Who Profits? Research Center identifies many others from Expedia and Tripadvisor to Caterpillar and Microsoft.  

Businesses operating in or profiting from the settlements do so despite the International Court of Justice finding that “Israel has an obligation to put an end to these unlawful acts… [and] to repeal all legislation and measures creating or maintaining the unlawful situation, including… all measures aimed at modifying the demographic composition of any parts of the territory [and] to provide full reparation for the damage caused by its internationally wrongful acts to all natural or legal persons concerned.” As such, businesses are in violation of human rights commitments and may also themselves be open to future claims for reparations.  

Elsewhere in the world, many countries provide charitable status – and therefore a tax incentive – for organisations that support illegal settlements in occupied Palestine. This has seen legal challenges to specific organisations and also attempts to legislate against the use of public funds for internationally unlawful aims (as currently in New York’s proposed ‘Not on Our Dime’ Act). The use of tax revenue is yet more direct in a range of countries including the UK and US which are providing military support to the plausibly genocidal campaign by Israel.

Tax justice in the Palestinian context 

Israel’s occupation denies Palestinians’ human rights, including the rights to self-determination and to development. The military campaign being waged against Palestinians, combined with dehumanising rhetoric from the highest levels of the Israeli state, and policies of collective punishment that deny Palestinians’ basic needs, appears explicitly genocidal. Many of the actions involved seem clearly to constitute war crimes.  

In this context, tax matters may seem almost administrative, and of negligible importance. Nonetheless, Israel’s withholding of tax sovereignty has been a significant and compounding factor in the denial of Palestinian rights. A future Palestinian state can only be constructed on the basis of full tax sovereignty, to ensure the potential for the effective fulfilment of those rights.  

• The Tax Justice Network will seek to contribute to the research and analysis needed to support critical policy decisions on this issue, emphasising the key role of taxation in successful state-building.  

Tax has also been used as a tool to incentivise the occupation, and not only in Israel. Tax law and policy provide potential levers to curb or even reverse those effects, from the denial of charitable status to organisations supporting illegal occupation, to the denial of tax benefits for companies profiting from occupation. Taxpayers elsewhere are empowered to challenge their governments over the use of public funds to support internationally unlawful acts.  

• In keeping with the aim of promoting progressive tax policies that curb inequalities and promote the enjoyment of human rights, the Tax Justice Network will explore where it may support partner organisations to challenge unjust national tax incentives.