Economists: Extra taxes on foreign imports hasty decision

The Palestinian government’s decision to apply extra taxes to goods imported from China will strengthen national products and increase government revenues, says the minister of national economy Jawad Naji. But economic experts believe the decision is likely to increase indirect imports through Israeli middlemen, and that will eventually support the Israeli economy and maintain stagnation in Palestine's economy. West Bank economist Mahmoud al-Jaafari highlighted that poor Palestinian families depended on goods imported from China, because they were relatively cheaper, especially goods which are not produced in Palestine. After extra taxes, he added, these products will become more expensive and poor families will be unable to find something cheap to cover their needs. Speaking to Ma’an Tuesday evening, al-Jaafari highlighted that goods from China make up 5 percent of Palestinian foreign imports. Meanwhile, 70 percent of foreign goods come from Israel, 20 percent from EU countries and 5 percent from other countries in the world. Appropriate studies were not conducted before the decision was made, added al-Jaafari. He said several Palestinian factories had stopped operating and would need a long time before they can restart. Al-Jaafari’s comments were seconded by Birzeit University lecturer and economic expert Nasr Abdul-Karim. This decision, he told Ma’an, will maintain the Palestinian economy’s dependence on the Israeli economy. Palestinian merchants will be encouraged to purchase Chinese goods indirectly via Israeli agents, according to Abdul-Karim. Thus, he added, direct importation “which Salam Fayyad government urges will be reduced.” The veteran economist wondered whether the decision would really achieve its basic and “logically accepted” goal of strengthening national produce and limiting importation from China. Who will be directly harmed by the decision? Asked Abdul-Karim maintaining that Palestinian factories will not be able to provide Palestinian market with all the goods needed, especially in the first months. “If consumers find both Palestinian and Chinese goods too expensive, they will seek to buy Israeli goods,” he added. Hebron-based businessman Hamdi al-Uweiwi criticized the decision blaming the Palestinian government for trying to put additional burdens on Palestinian citizens to cover its financial crises. Though al-Uweiwi owns a shoe factory, he imports goods from China “because local products can’t cover the Palestinian market’s needs.” He asserted that several Palestinian businessmen already started to contact Israeli agents to arrange indirect deals from China. Local industries, according to Uweiwi, have collapsed over the past decades and would take long until it can recover.