Israeli Prime Minister Benjamin Netanyahu said he intends to introduce a controversial new law within a week. It is being called "pay for slay".
Under the new law, the Palestinian government would have to pay compensation to the families of those arrested or killed while carrying out attacks. And Israel would deduct an amount equal to that compensation from the tax funds it raises for Palestinians.
If the law is passed, it would cut revenue to the Palestinian Authority by about $330m a year.
From West Jerusalem, Al Jazeera's Harry Fawcett examines the effects of the proposed new law.