Some Palestinians in the occupied West Bank and Gaza Strip have stopped paying taxes to the Israeli administration as part of a program of civil disobedience. But that resistance might be expected to take place even without the 10-month-old intifadah (uprising), since Palestinians pay substantially higher taxes than Israelis.
In the West Bank, wage earners and business owners are taxed on the basis of the Jordanian law in effect in 1967 when the Israeli occupation began. Israel has chosen not to alter the law's basic rules, but has made significant changes in the tax bracket intervals.
These alterations lowered the amount of annual income above which the highest tax rate, 55 percent, is paid by West Bank wage earners. Under the original Jordanian law, the taxpayer would have to pay 55 percent on all income beyond 8,000 Jordanian dinars.
Israel reduced the intervals between the tax brackets so that the top tax rate is reached on annual incomes of 5,231 Jordanian dinars and beyond, according to rates in effect in January 1988.
The 5,231 Jordanian dinars amount equaled 24,064 Israeli shekels, or roughly $16,000, based on the exchange rate of 4.6 Jordanian dinars to the shekel used by the Israeli tax authorities in January 1988.
In contrast, a wage earner in Israel does not reach the very highest tax rate until his or her annual income exceeds 45,600 shekels (roughly equivalent to $30,000), and even then, the tax assessment is levied at a rate of only 48 percent.