The government’s security Cabinet said it was implementing a law passed last year allowing Israel to withhold funds used to pay stipends to Palestinian attackers and their families from taxes Israel collects on the Palestinian Authority’s behalf.
Israel says the payments encourage violence — a claim the Palestinians reject.
There was no immediate Palestinian reaction, but in the past Palestinian officials have defended the payments by saying those involved in deadly attacks are a small percentage of those aided by the fund, and that the Palestinian Authority has a responsibility to its citizens like any other government.
The freeze comes as the Palestinians face major budget cuts made last year after the United States slashed funding for the U.N.’s Palestinian refugee program UNRWA and for development programs in the Palestinian territories. The U.N.’s World Food Program also cut back services due to funding shortages.