Knesset to debate tax plans proposed by Sheshinski C'tee

Analysis: Recommendations regarding taxation and concession payments for companies benefiting from Israel’s oil and gas resources passed to politicians.

November 11, 2010 22:54
2 minute read.
Knesset to debate tax plans proposed by Sheshinski C'tee

Yacimovich Knesset 248.88. (photo credit: Ariel Jerozolimksi)

After the Sheshinski Committee delivered its interim recommendations regarding taxation and concession payments for companies benefiting from Israel’s oil and gas resources, the baton was passed Thursday to Israel’s politicians, who are expected to debate whether to accept in full or in part the controversial recommendations.

The government is likely to debate the recommendations in one of its coming meetings, but all eyes are on the Knesset, where two powerful committees were vying to host the debate on the conclusions. The Finance Committee, under MK Moshe Gafni (United Torah Judasim), is the more likely of the two candidates, as one of its key roles is debating taxation plans. But the debate could also be held in the Economic Affairs Committee, which usually discusses subjects pertaining to Israel’s business community.

Gafni’s position on the commission’s interim conclusions was no secret Thursday, when the outspoken committee chairman said that “the recommendation is in accordance with both logic and straight thinking – the state must take the investors into consideration, but natural resources that the Creator of the World gave to Israel belong to the country’s citizens.”

Finance Committee member MK Shelly Yacimovich (Labor) also was likely to support adopting the recommendations as they stood. The Labor MK congratulated the Finance Minister, frequently her opponent in budget debates, for the recommendations, which she described as “moderate, but definitely significant and important.

The system of raising taxation and not harming the concessions is the practice in many countries.”

“Now,” she warned, “we just need to make sure that Prime Minister [Binyamin] Netanyahu will carry out the recommendations in their entirety and does not give in to the cynical pressures of the moguls who hope that the public gets mere crumbs from the state’s natural resources.”

But not all of the politicians likely to be involved in the decision- making process saw eye-to-eye with the commission’s findings.

National Infrastructures Minister Uzi Landau (Israel Beiteinu) argued on an Israel Radio interview Thursday morning that changing the rules on companies after they had already invested in searching for gas and oil in Israel was likely to “drive away investors.”

The investors, he argued, such as Noble Energy, which stands to benefit from the expected proceeds of the Tamar natural gas field, have taken more risks in investing in Israel than in other western states, such as Norway or the United States. As a result, he said, raising the taxation and lowering the returns for such investors could cause them to take their business elsewhere.

Later in the day, in an interview with Channel 2 Television news, Landau said that the committee’s interim conclusions would push investors toward Arab states.

While he said that the report “was written by the best economic minds,” he argued that in deciding whether to adopt the recommendations, politicians would also need to consider security and geo-political issues. Landau said that the current developments “demand the involvement of the prime minister.”

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