Israeli media reports that the government is halting transfers of the tax revenue it collects on behalf of the Palestinians in retaliation for their move to join the International Criminal Court in the Hague.

An Israeli official, speaking on condition of anonymity, confirmed the substance of the reports on Saturday but refused to elaborate.

Under the current interim peace accords, Israel collects taxes for the Palestinians and transfers them each month to the Palestinian Authority. December's frozen transfer amounts to about $127 million.

Joining the court means the Palestinians could pursue war crimes charges against Israel. The move transforms Palestinian President Mahmoud Abbas' relations with Israel from tense to openly hostile. It's meant to pressure Israel into withdrawing from the occupied territories that Palestinians demand for a future state.