Netanyahu re-examines Sheshinski recommendations

By JPOST.COM STAFF
January 9, 2011 13:46

PM plans meetings on gas tax with Stanley Fischer, Sheshinski C'tee members, infrastructure and environmental protection minister.

2 minute read.



Netanyahu re-examines Sheshinski recommendations

Netanyahu 298.88. (photo credit: Ariel Jerozlimski)

Prime Minister Binyamin Netanyahu surprised cabinet members Sunday, hinting that he did not accept the recommendation of the Sheshinski Committee about natural gas taxation.

"Today, after the Cabinet meeting, I will meet with the members of the Sheshinski Committee and will hear their recommendations, Netanyahu said. "Later in the week, I will meet with the relevant ministers: Finance Minister Yuval Steinitz, National Infrastructures Minister Uzi Landau and Environmental Protection Minister Gilad Erdan, as well as with Bank of Israel Governor Stanley Fischer," the prime minister continued.

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Netanyahu said that he would meet with the investors from "Tamar." 

"I will make a decision and will submit my recommendation to the Cabinet within a short time, at one of our upcoming meetings, for their approval," Netanyahu said.

"Thus Israel will make a critical decision regarding a natural resource that is important for our future. I will recommend that the Cabinet establish a national fund to utilize the fruits of our gas reserves for several goals, with security and education foremost among them," Netanyahu added.

The tax rate on gas, including royalty and company tax, stands at nearly 30 percent, and is among the lowest in the world. The taxation rate recommended by the Sheshinski Committee would both cut tax breaks on entrepreneurs and also add a new special levy, and would grow over the next 8 years from a rate of 50% now to 62%. This rate depends on company profits and a rate of 50% on all new gas reservoirs that will begin functioning by 2014; including, presumably, the oil field Meged, which, according to Globes, is valued at an estimated $830 million.

The Infrastructure Ministry also proposed to raise the taxation rate between 40% to 45%, excluding completely the Tamar reservoir.

Netanyahu will have to forge a compromise between the Sheshinski committee's recommendations and the recommendations of the committee's minority members: Infrastructure Ministry Director-General Shaul Tzemah, and Petroleum Supervisor Yaakov Mimram.

The prime minister also mentioned during the cabinet meeting his plans to submit a comprehensive, NIS 800 million shekel proposal for national emergency preparedness against disasters. From that NIS 800 shekel, 350 million would be designated for an "upgraded national fire service and an aerial firefighting force." The proposal also includes the leasing and eventual purchasing of firefighting planes. Netanyahu said: "I spoke with Canadian Prime Minister Stephen Harper last Friday regarding possible bilateral arrangements to purchase Canadian planes, which are the best in the world for this kind of mission."

"The new fire service will be part of the Public Security Ministry," he added.


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