Notes

Efforts should be made to enhance public revenues through broadening the tax base rather than increasing the tax rates. Equity issues are probably better dealt with via expenditure policy rather than high marginal taxes. Foreign support to the PA’s budget, which has been so important, is unlikely to decline abruptly in the early years after the establishment of the new state. Thus, international goodwill, together with compensation from Israel (as argued in Chapter 10), would allow the new authority to spend more than it collects for some years. What is essential, however, is to start planning, from the beginning, to achieve a sustainable fiscal stance in the foreseeable future. The fiscal challenges are not insuperable but the momentum of the reforms, which the PA has already initiated, will need to be maintained and taken further, not least in the areas of transparency and involving the public at large in selecting the priorities and deciding upon their ranking.