FILE PHOTO: Israeli Finance Minister Moshe Kahlon gestures as he speaks at an event in Ofakim, southern Israel May 29, 2017. REUTERS/Amir Cohen

JERUSALEM (Reuters) - Israel will cut the tax revenue it transfers to the Palestinian Authority if it pays the family of the killer of an American-Israeli settler, Finance Minister Moshe Kahlon said on Friday.

Kahlon said he had instructed that any sum paid to the attacker’s family be withheld from tax revenue that Israel collects on behalf of the Palestinian Authority (PA) under interim peace deals.

“I will examine other ways to limit the economic activity of the terrorist’s family,” he said on Twitter.

American-born Ari Fuld, 45, was stabbed at a shopping mall in the Etzion bloc of Jewish settlements south of Jerusalem on Sunday. His attacker, Khalil Youssef Jabarin, 17, from a village in the occupied West Bank, was shot at the scene and has since been in Israeli custody.

It has not yet been decided whether Jabarin and his family will receive payments, according to a Palestinian official.

Israel has in the past withheld tax funds and in July enacted a law to financially penalize the PA by the amount of stipends paid to Palestinians jailed by Israel, their families, and the families of those killed by Israeli forces.

Israel says such stipends are a reward and encouragement for the prisoners’ actions against it. The Palestinian Authority says they are welfare payments to support them and their families.

The PA, which has limited self-rule in the West Bank, where Israel retains overall security control, pays stipends that start at 1,400 shekels ($392) after a prisoner has been detained for three months. Amounts differ depending on the length of sentence.

Earlier this year, U.S. lawmakers enacted legislation to sharply reduce the annual $300 million in U.S. aid to the PA unless it took steps to stop making what lawmakers described as payments that reward violent crime.