West Bank Economy Contracts After Israel Revokes Work Permits and Withholds Tax Revenue Following October 7 Attack

The West Bank economy has contracted substantially since the October 7, 2023 Hamas attack, with private companies reporting an estimated 50 percent decline in business, according to a report released by the International Crisis Group. The report, based on interviews with Palestinian business leaders, mayors, and government officials, states that Israel revoked work permits for most of the nearly 200,000 Palestinians previously employed in Israel.

That step deprived the Palestinian economy of nearly $400 million per month, or almost one-fourth of its overall economic output.

4 million Palestinians living in the West Bank now face roughly 30 percent unemployment. Many businesses struggle to pay workers, contractors, and suppliers amid tightened movement controls, disrupted supply chains, and heightened uncertainty. The Palestinian Authority, the largest employer and service provider in the occupied West Bank, has borrowed heavily to stay afloat.

Public-sector workers remain unpaid and infrastructure such as roads and water lines has deteriorated, keeping patients out of hospitals and children out of school. Most of the Palestinian Authority’s revenue comes from taxes collected on goods entering the West Bank through Israeli ports. Israel has withheld billions of dollars in owed tax revenue and unilaterally imposed deductions.

No tax revenue transfers from Israel to the Palestinian Authority have been made since May 2025. Joost Hiltermann, the International Crisis Group’s special adviser for the Middle East and North Africa and author of the report, said Israeli officials did not agree to be interviewed. He noted internal disagreements within the Israeli government.