Palestinian Authority premier Salam Fayyad said Monday that Israel's decision to withhold Palestinian tax revenue over the announcement of Palestinian unity would not deter reconciliation efforts.
"The Palestinian Authority will never accept division as the price of financial support," Fayyad told reporters Monday afternoon in Ramallah.
Israel's Finance Minister Yuval Steinitz told Army Radio on Sunday he had postponed a meeting to arrange the transfer of an estimated 300 million shekels ($88.7 million) in tax revenue which Israel collects on behalf of the PA.
Minister of Economy Hasan Abu Libdeh warned Sunday that the PA might fail to meet its payroll if Israel froze its revenue.
Salaries were due to be transferred into the accounts of more than 170,000 employees on Monday, but have not been paid.
Speaking to reporters on Monday, Fayyad did not comment on how long civil servants would go unpaid.
Israel's finance minister said the PA's money would be frozen pending an assessment as to whether the cash would trickle down to Hamas under a new reconciliation agreement to unify the West Bank and Gaza governments.
Tax revenues on goods imported to the West Bank are collected by Israel, which maintains control of the international borders. The revenues make up a significant portion of the Palestinian Authority's operating budget, and the refusal to transfer the funds comes amid a government program that seeks to move away from international aid and rely more on government revenues.
The taxes are paid by Palestinian companies and individuals bringing goods into Palestinian areas for sale.
Fayyad called on the international community to pressure Israel into handing over revenues.
"We are not asking Israel for a favor," the prime minister said, adding that "Palestinian unity should not be subject to Israeli threats."
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