In its latest bid to impound Palestinian tax money, the Israeli government is going after funds Palestinians use to pay people who are killed, injured or imprisoned by Israeli forces.

The Knesset approved yesterday the first reading of a bill to deduct the amount of money the Palestinian Authority pays to victims of the Israeli occupation from the Palestinian tax money collected by Tel Aviv in order to compensate “terror victims” in Israel.

The bill, which passed with 55 votes for and 14 against, seeks to give the Security Cabinet the authority to order a freeze of the transfer of money to the Palestinians as well as to outline clear instructions on what to do with the funds deducted, Ynet news reported.

While presenting the bill Deputy Defence Minister Eli Ben-Dahan said: “Today, the State of Israel says ‘no more’. We will fight terrorists not just by catching them and bringing them to justice, but even after they have been jailed. We will continue fighting them and their families and those who fund them and show zero tolerance to terrorism.”

The report went on to explain that the deducted money would be put in a special fund to pay compensation to terror victims; and to carry out projects as part the fight against terrorism and the funding of terrorism.

READ: Israel freezes another $100m in Palestinian tax revenues

This is the latest Israeli attempt to penalise Palestinians using tax money which the Palestinians are entitled to. Previously they sought to punish the Palestinian leadership by freezing tax and customs payments when the PA successful won its bid at the UN in late 2012 to achieve non-member observer state status. Tel Aviv also withheld tax revenues in retaliation against the PA’s decision to join the International Criminal Court.

The tax collection regime in the occupied territory, which grants Israel the right to collect tax on behalf of the Palestinians, is one of the many oddities of the Oslo process. Critics say it has weakened Palestinians politically and economically.

While Israel has used the tax money it is not entitled to as a political stick against the PA, this time it is going after the families and victims of the occupation regime whose livelihood is dependent on the funds. In fact the fund has been a major source of contention in Washington and Tel Aviv.

Last March, Israeli Prime Minister Benjamin Netanyahu claimed during a speech at the Israeli lobby group AIPAC that Mahmoud Abbas was paying $350 million a year to “terrorists and their families”. He went on to say that Palestinians were being encouraged to “murder Jews and get rich”.

Not only is the figure of $350 million far-fetched, the accusation that the “martyrs’ fund” goes to terrorists and their families is denied by Palestinians. Money not only goes to people who were killed or injured by Israeli forces, it also goes to Palestinian prisoners who are detained in their thousands by an occupation regime that designates, children and stone throwers terrorists.