Eytan Sheshinski 311.
(photo credit: Marc Israel Sellem/The Jerusalem Post)
The High Court of Justice on Wednesday rejected petitions by two oil and gas
exploration firms against the so-called Sheshinski Law, upholding the state’s
right to increase its share of their revenues.
Isramco, a partner in the
Tamar and Shimshon natural-gas licenses, and Givot Olam, owner and operator of
the Meged oil-field license, led the petitions, arguing that the law would harm
them retroactively. They said they had obtained their property rights and made
large investments before the government decided to establish the Sheshinski
Judges Miriam Naor, Uzi Vogelman and Zvi Zylbertal wrote in
their ruling that as the law does not apply to previous revenue, it cannot be
considered retroactive. They said although the petitioners began investing
before the new law was passed, tax-rate amendments are “a common legislative
“This law does not contradict Israel’s values as a Jewish and
democratic state. With regard to property rights, no disproportionate harm has
been done,” the judges wrote.
Under the 2011 Oil and Tax Revenues Law,
which was based on the Sheshinski Report’s recommendations, the state’s share of
net profits from oil and gas production rose from the previous one-third to 52
percent to 62%. The initial levy on the companies will stand at 20% and rise
gradually to 50%, depending on the amount of excess profits, while the rate of
royalties will remain at 12.5%.
The government did not make an immediate
comment following the ruling, but Labor chairwoman Shelly Yachimovich issued a
statement welcoming the court’s decision to reject the “baseless” claim about
“The state has a complete right to amend its taxation
policy, particularly when [the previous policy] is unreasonable and harms the
public,” she said. “These same companies did not complain about retroactivity
when their profits doubled as a result of a sharp decrease in the corporate
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MK Dov Henin (Hadash) said he would propose legislation that raises
government royalties from natural resources once the new Knesset session begins.
Henin praised the High Court’s decision to reject the petition against
Sheshinski’s policies, saying the state has a right to derive funds from money
made with natural resources.
“The High Court confirmed all our arguments
that there is no retroactivity in raising royalties,” Henin said.
need to raise the Dead Sea royalties [less than 10%], phosphate [even less] and
mineral water [where there are no royalties at all]. At the opening session of
the Knesset I will promote comprehensive legislation on the subject.”
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