Tareq S. Hajjaj
Mondoweiss / October 18, 2022
The Hamas government has imposed a tax on imported clothing in a bid to support local industries, causing clothing prices to soar and leaving families in the difficult position of choosing between buying food or clothing for their children.
Osama Mohammed, 39, is a father to 8 children, 5 of them currently attending school. He is a computer engineer by training, but works as an accountant in a construction company. He has worked at the company for 3 years now. During this period, everything has become more expensive in Gaza as prices have dramatically risen during the past year. His salary of 1000 NIS, however, has stayed the same.
School seasons, like many other events, such as the Eid holidays, are hard on most parents in Gaza. When their children are expecting something new, like Eid clothes, or new school bags, families struggle to provide the kinds of things that will make their kids happy. Children tend not to understand their family’s financial hardships, and they end up deprived of the simple things that bring children happiness. In these cases, the deprivation is mutual, and the effect it has on parents cannot be understated.
A week before the latest Israeli aggression on Gaza, which took place right before school season, the government in Gaza imposed a slew of new taxes, including taxes on jeans, sports uniforms, school robes, and formal girls’ school uniforms.
“I have to choose between getting my children school uniforms and getting them food.” – Osama Mohammed
Gaza is subject to continuous inflation. At the same time, the Hamas government has levied increasing taxes, which has exacerbated people’s suffering. A recent decision by the Ministry of Economy in Gaza last June to increase tariffs on 24 items, including jeans, has added 10 NIS to the cost of every piece of cloth brought into the Gaza Strip. The Ministry supported its decision by explaining that the tariffs are a move to protect local industries and local production. While the battle rages on between the government and the merchants who are obligated to pay the tax, people like Osama, representing the majority of Gaza residents, are caught in impossible economic conditions, where rising prices have far outpaced their income.
Those families are put in the difficult position of making difficult choices regarding which necessities they are able to spend on.
“I’m working all day, standing on my feet most of the time, and I can’t save some money to get my 5 daughters new uniforms for school — and that was before the new 10 shekels added to the cost of their jeans. Now I have to choose between getting my children school uniforms and getting them food,” Osama said.
What happened ?
Ever since Hamas assumed control of the Gaza Strip in 2007, taxation has been one of the ways for the government to support itself. People react to new taxes by saying that someday they will be taxed for breathing. This air of cynicism has become common amid recent waves of taxation, including the most recent one on imported nuts, chips, plastic, jeans, sportswear, and other products.
“The fees on importing such products aim to build up the local industry,” ministry representative Abdelfattah Abu Musa said. “There used to be over 900 clothing factories in Gaza, which supported 30,000 workers. Only 5,000 of them remain in the field. These fees aim to bolster local industry by offering new jobs and increasing local incomes.”
The previous Israeli wars on Gaza specifically targeted the industrial sector in order to bring Gaza’s economy to its knees. The Economic Ministry has put out economic summaries after each war — in 2008, 2012, 2014, and 2021 — which shows that over 1000 factories and workshops were shut down during these periods.
Economic struggles
Clothing importers disagree with the Economic Ministry, calling upon the decision to be reversed. The Ministry has so far not issued a response.
“I’m the first person to be supportive of local industry, but in our case, we import the fabric, the threads, the machines, and the accessories of the local industry — so in Gaza, ‘local’ industry only collects and arranges different products together,” said Hussam al-Howaity, 42, a member of the Gaza Clothes Trading Syndicate and owner of a commercial center in Gaza city. “So whenever the Israelis decide to close Gaza’s crossings, local industry will stop as well.”
“I would love to invest and start up a clothing factory in Gaza, but after spending many millions and opening the factory, can the Economic Ministry guarantee that it will not get bombed in another war?” he continued. “Factories destroyed in the 2008 war have since remained in disuse, and have not been reopened. ”
Standing on one of the highest buildings on Omar al-Moktar street, Al-Howaity points out to the Saha square in the middle of Gaza city and its central market. “Look at the streets, they used to be full of customers! Now they’re empty, and people can’t buy anything at these prices,” he said.
“Only 10% of our customers are still regularly buying from us. A piece of clothing that costs 10 Shekels to bring from China or Turkey will require 30 Shekels in taxes after this new decision, and customers will have to pay the costs, because traders will otherwise be unable to make a living. Customers are not interested in whether the clothes are local or imported — they are only interested in the price they will pay.”
Taxes disproportionately affect the poor
According to the Palestinian Central Bureau of Statistics, the unemployment rate in Gaza has increased by 2% in the last year, at a time when nearly half (46.6%) of Gaza’s residents are already unemployed.
“There is no doubt that this move is going to harm large sectors of people in Gaza, which will put pressures on the market and decrease the importation of goods,” economic expert Mohammed Abu Jiab tells Mondoweiss. “People who already live in poverty will be harmed too, leading to greater complications in Palestinian daily life.”
“In some sectors like the clothing sector, local industry will be replaced by importing cheaper goods,” Abu Jiab continued.
Gaza used to have a very developed and important industry in the clothing sector — one of the biggest suppliers to international markets.
“Today there are attempts to rekindle this sector through higher tariffs on imported goods, to protect local industry.”
“Strengthening production in Gaza is worthwhile, even if all the raw materials are imported. If we import raw materials, it means workers in Gaza can find employment, and we spend our money locally, keeping it in the economy,” Abu Jiab explains.
Abu Jiab clarifies how this plays out when calculating the cost of producing a container of clothing. “Importing a single container costs $100, and the profit for traders is about $20, but the rest of the money just went out of Gaza to the foreign manufacturer,” he said. “But if we were to import fabrics and threads, that would cost $40, and the rest of the same amount will be distributed across operational processes — saving money and offering jobs at the same time.”
The importance of this is that every “1000 jeans made in Gaza can guarantee job opportunities for 40 workers,” according to Abu Jiab.
The Gaza Syndicate of Clothing Traders argues that over 1.1 million pairs of jeans used to be imported into Gaza, but that due to the worsening economic situation, the number decreased to 800,000 pairs of jeans every year.
Reluctance to purchase
Markets in Gaza are already stagnant, especially in the clothing sector. People like Osama end up finding ways around paying the increased costs.
“I resize my daughters’ clothes and give them to the youngest,” Osama said.
At a manageable price (2–5 NIS), Osama takes the old clothes of his eldest daughters to a tailor, and resizes them to fit the younger daughters. “I can’t buy them all new clothes at the same time, because each of them would cost me between 150 to 200 shekels, which is all my income,” he said.
Osama’s oldest daughter is 13, the youngest 6. They know that they’re not getting any new clothes for the coming school season. But for them, the economic situation or the rise in taxes doesn’t occupy their thoughts, rather dreaming about getting a new uniform and going to school with everything they need.
“I’m not a bad father,” Osama says. “I would give my heart to my family, I’m not lazy or helpless either. But even with all my time and effort spent for my family, I can’t give them the pleasure of starting school the way they want.” Osama pauses for a moment, a sense of hesitation hanging in his voice. “Am I a good father to them?” he wonders.
He tries to explain the situation in which his family finds itself. “After we lived through another devastating war last August, we expected that the government would take some steps to support us, to encourage our perseverance in these conditions and help strengthen our determination to remain on this land — the government increased the prices of basic goods instead. Now we are not sure who is with us, we who are poor and can’t support our families because of the current situation,” he said.
Osama believes that any government should help its people when they have lived under siege and continuous wars year after year. “The government should be with us, not against us,” he said.
Tareq S. Hajjaj is the Mondoweiss Gaza Correspondent, and a member of Palestinian Writers Union
