Cheap smokes early benefit of Palestinian accord

Under the deal agreed last month, Islamist movement Hamas is supposed to return control of the Gaza Strip, which it has ruled for a decade, to the Palestinian Authority by December 1.

Palestinians hope it will lead to easing Israeli and Egyptian blockades of Gaza, where poverty is widespread and unemployment is more than 40 percent for the territory's two million residents.

In a first step, the Palestinian Authority, dominated by president Mahmud Abbas's Fatah, took control of Gaza?s borders with Egypt and Israel on November 1.

The PA also immediately scrapped "illegal" taxes and fees -- those charged by Hamas during its decade of rule.

It includes removing a 25-percent tax on cars, as well as taxes on other goods.

So far most of the cuts haven't been passed on to customers, with businesses waiting to see what happens on December 1.

But smokers in the coastal Palestinian territory can exhale in relief, with cigarettes already cheaper.

- 'End poverty' -

Hamas had imposed a seven-shekel ($2) tax on packs of cigarettes entering the Gaza Strip through border tunnels with Egypt.

Since November 1, the price of a pack of Marlboros has fallen from 35 to 25 shekels, while Palestinian-produced cigarettes ?- made in the occupied West Bank -? have been imported for the first time in years.

The Palestinian smokes -- called "Liberty" -- are selling for eight shekels a pack.

When they became available, a crowd gathered at one shop in Gaza to take advantage.

About 15 percent of Gazans smoke, according to 2016 figures from the Palestinian Central Bureau of Statistics.

"Today I bought them for eight shekels a pack, but I was paying at least 15 for Egyptian cigarettes," said Ahmed Khalil, a 45-year-old government employee, who smokes more than two packs a day.
"The drop in the cigarette prices is good, but we want reconciliation to end poverty, unemployment and the economic situation."

Osama Nofal, who worked for the Hamas-led economy ministry in Gaza, said it previously collected around 20 million shekels in taxes from cigarettes a year.

Hamas took in around 70 million shekels a month in taxes and fees, according to Nofal.

- 'My profit margin' -

Taxes on purchases of cars and other goods have also decreased, but Gazans are still waiting to see the benefits in many cases.

"Since the unification of the taxes, prices have reduced between $15,000 and $1,000 dollars per car, depending on the model," said Wael Al-Hallis of the Association of Vehicle Importers in Gaza.

"But the market is still largely static. People are watching cautiously for what will come after reconciliation (on December 1)."

Ahmed Abu Aida, who owns an electrical company, told AFP that they were yet to pass on the savings to customers.

"All these (Hamas) fees were paid from my profit margin," he said.

Israel has maintained a blockade on Gaza for a decade, restricting many goods it says Hamas might use for its military purposes.

Hamas and Israel have fought three wars since 2008.

Those concerned with Gaza's deteriorating humanitarian conditions say the Israeli measures amount to collective punishment.

Gazans had previously used tunnels under the Egyptian border to smuggle in goods, but Cairo has destroyed many of them.

Palestinian leaders had hoped Egypt would reopen its border with Gaza on November 15, but that has not happened.

Egypt is expected to host a meeting of Palestinian political factions on next steps in the reconciliation process on November 21.

Economic analyst Maher al-Tabaa told AFP that as long as the Israeli and Egyptian grip on Gaza's borders continued, the reconciliation agreement could only have a marginal impact.

More than two-thirds of Gazans are reliant upon international aid, according to the United Nations.

Tabaa said while removal of the taxes was "positive," the "economy will not recover in a noticeable way in Gaza because of the lack of purchasing power and the continuation of the blockade."