The report analyses the evolution of the tax system in the Palestinian territories governed by the Palestinian National Authority (PNA) during the period 1994-2000. In particular, it explores the political, institutional and economic forces that shaped the tax system. Findings include:
the major problem for the PNA was that it did not manage to create confidence in its ability and capacity to deliver promised returns for taxes paid and foreign aid received.
the deteriorating security situation in the late 1990s and declining social welfare raised citizens’ perceptions of exploitation from an unequal contract with the authority and promoted resistance. In this perspective, the PNA’s trustworthiness was closely linked to citizens’ perceptions of the capacity of the PNA to make credible commitments about the use of tax revenues and foreign aid, as well as its procedures for designing and implementing fiscal policy non-arbitrarily
extensive and increasing corruption contributed to undermine popular confidence in the PNA as a credible force in the struggle against the Israeli occupation