"They can forget about seeing a single agora (Israeli equivalent of 1 cent) for the next four months," he said, referring to the $105.2 million in tax and tariff revenue that Israel collects for the Palestinian Authority and transfers to them on a monthly basis, The Jerusalem Post said.
Lieberman made the statements Tuesday night at a Yisrael Beiteinu Party meeting in Tel Aviv.
Israel has decided to withhold the funds to pay debts incurred by the Palestinians on electricity and water bills and other services to Israeli companies, the Post quoted Lieberman saying. He added that money for salaries was paid to the Palestinians in advance.
"First we will get back what we are owed and then after four months we will check and see what to do," Lieberman said.
Israel paid $236.7 million to settle P.A. debts and advanced it another $184.1 million to pay salaries, he said.
His comments came a day after 27 EU foreign ministers blasted Israel for plans to build in the E1 area that links Jerusalem and Ma'aleh Adumim and other West Bank settlements.
The European ministers issued a statement demanding Israel "avoid any step undermining the financial situation of the Palestinian Authority. Any such action by Israel would undermine existing cooperation mechanisms between Israel and the Palestinian Authority and thus negatively affect the prospects of negotiations," the statement said.
The ministers also called on Israel to respect all contractual obligations with the Palestinians.
The statement also said the European Union will work to ensure that all agreements with Israel "must unequivocally and explicitly indicate their inapplicability to the territories occupied by Israel in 1967, namely the Golan Heights, the West Bank including East Jerusalem and the Gaza Strip."
Lieberman criticized the statement saying, "It is hard not to hear the lack of justice and imbalance in the resolution," the Post said.