x Abu Dhabi, UAEWednesday 17 January 2018

Traders hit by Gaza City taxes

Tracking down unpaid licence fees is part of a broader effort to increase municipal revenue by chasing outstanding debts.

Ala Shawa, shown above with his father in his Gaza City supermarket, says Hamas is passing its problems onto ordinary people.
Ala Shawa, shown above with his father in his Gaza City supermarket, says Hamas is passing its problems onto ordinary people.

GAZA CITY // Radi Abdel Karim spends most of his days in an old hospital bed that he has somehow managed to squeeze into the corner of a shop space in a northern neighbourhood of Gaza City. Mr Abdel Karim, 65, has been bedridden for more than 20 years, the result, he said, of a spinal cord injury. But he tries to supplement the earnings of relatives by selling old junk that others bring him.

"I make maybe 100 Israeli shekels [Dh98.8] a week," said Mr Abdel Karim last week amid the discarded plastic, metal and other bits that lie scattered on the floor and on a couple of rickety shelves in his "shop". "Shop" is a somewhat grand description for the shabby concrete room where one entire corner is taken up by a specially installed but rusty old metal ramp on which Mr Abdel Karim can navigate his wheelchair.

But "shop" is exactly what the place has been designated by the Gaza City municipality, which is demanding that Mr Abdel Karim, along with all shop-owners in Gaza, begin to pay overdue small business licence fees. Tracking down unpaid licence fees is part of a broader effort to increase municipal revenue by chasing outstanding debts. According to municipal records, just 10,000 of 67,000 households in the city are up to date with their service fees, while only 3,000 of 16,000 small businesses have paid for their licences.

But the effort to pursue municipal dues comes in desperate times. The Israeli-imposed blockade on Gaza, now more than four years old, has forced 90 per cent of industry to close, stopped exports and prevented all but the most basic foodstuffs from entering. Poverty hovers around 65 per cent and unemployment is 43 per cent. Chasing down arrears in this context is not popular. "They are asking me to pay 900 Israeli shekels. How am I supposed to afford this?" said Mr Abdel Karim, who, along with four other shopkeepers gathered around him, said he would under normal circumstances pay.

"But we're all under siege here. It's not just Hamas," he said. Officials recently admitted that the government in Gaza is facing a financial crisis. Belts were tightened earlier in the year when the government, which always prided itself on paying wages on time, announced that it would only pay the full salaries of junior employees, while the rest would have to accept half their wages until coffers were restocked.

Compounding the government's difficulties, the US Treasury in March froze the US-based assets of the Gaza-based Islamic National Bank, which the government uses to pay salaries. With other banks already under threat of sanction should they deal directly with the Hamas-run government, Jamal Nasser, a Hamas politician, conceded last Tuesday that "the government is facing a crisis". That crisis long ago affected the Gaza City municipality. Rafiq Mikki, the mayor, said the government used to help the municipality to the tune of US$600,000 (Dh2.2 million) a month. That amount covered more than half the municipality's total expenditure of around $1 million, most of which goes to pay 1,700 employees.

But six months ago that payment stopped and Mr Mikki said the municipality has had to look for more ways to generate revenue. "We are trying to find other sources of funding. Asking people to pay what they are legally obliged to is one way of doing so," he said, adding that the municipality was also cutting costs. He conceded, however, that it was a bad time to be asking people for money. "On the one hand, everyone should, according to their ability, share in building this state," Mr Mikki said on Wednesday in his office.

"But we hesitate to send these bills and we are not asking people to pay if they can't. "We are willing to look at payment plans and we are willing to judge each case individually." Such a conciliatory tone was clearly lost on the mechanic, two shopkeepers and a felafel cook with Mr Abdel Karim. Ala Shawa, who runs a supermarket, said while he understood that the international community had never given Hamas a chance to govern, the Islamist movement still had the option of agreeing to an Egyptian-brokered unity proposal with Fatah.

"Hamas refuses to reconcile with Fatah for political reasons. So now Hamas is passing its problems on to ordinary people." All the men agreed that while the Israeli-imposed blockade on the Gaza Strip was to blame, Hamas could not expect to govern Gaza as if the siege did not affect everyone. "We have no water, no electricity, no medicine. The roads are not repaired, there is no business," said Mr Shawa. "Any more pressure and we will explode. To ask us to pay licences now is unreasonable."

Such sentiments are spreading. And even if the people gathered around Mr Abdel Karim said they were "too afraid" to organise and protest the municipal decision, both the Gaza City municipality and the Gaza government will be keenly aware of the growing discontent. "Hamas will be careful," said Omar Shaban, an economist and head of PalThink, the Gaza-based strategic studies think tank. "I think Hamas cares enough about its reputation and is close enough to people to understand that it can only go so far in raising money from ordinary people. There will be anger, but I think Hamas will know when to stop."

Mr Mikki was keen to emphasise that the municipality would "not force anyone to pay", and Mr Shaban said the government would survive the financial crisis. That crisis, however, would be solved only if the Israeli blockade ended. "The fundamental problem is not whether or not people can transfer money to Hamas. Banks are only one instrument in the siege. The fundamental problem is that there is no economic activity in Gaza and there are no jobs."