Sheshinski and Steinitz 311 .
(photo credit: Marc Israel Sellem)
The cabinet on Sunday approved the Sheshinski Committee’s proposals to raise
taxes on gas and oil profits following the recommendation of Prime Minister
“The natural resource is also important to Israel’s
economy and to Israel’s future,” Netanyahu said at the cabinet meeting.
“Regarding the latter, I intend to establish a fund for Israel’s future that
will be devoted to education and security.
The fund’s revenues will come
from the natural-gas reserves.
“We will cooperate with the investors to
bring the gas to Israel quickly. The most important thing now is to move
forward, and I believe we have the support of a majority of
Twenty-one ministers voted in favor, including those from the
Likud and Shas, while five from Israel Beiteinu voted against.
said an interministerial team would be established to consider ways to deal with
the macroeconomic aspects of revenues derived from natural
Netanyahu opened the meeting by reiterating his support for
the Sheshinski Committee’s recommendations. He announced that the government
would share half of the security costs for maritime gas and oil installations
and reserves. This will be for security installations requested by the Defense
“What needs to be done now is to take a decision so we can pass
the matter on for the approval of the Knesset,” Netanyahu said.
decided last week to adopt the recommendations, saying the committee had arrived
at the proper balance between giving the public with a fair share of the
utilization of the state’s natural resources and providing appropriate
incentives to companies engaged in natural-gas exploration.
Sheshinski Committee, which published its final recommendations at the beginning
of the the month, decided to leave the rate of gas royalties at 12.5 percent,
while implementing alternative fiscal tools for the purpose of increasing the
state’s share. It proposed a progressive tax on gas and oil profits, starting at
20% and gradually rising to 50% according to the amount of excess profits. As a
result, the share of the net profit for the state and public will increase from
one third to 52%-62%.
“We have taken another important step en route to
correcting a distortion in the taxation system for the state’s natural
resources,” Finance Minister Yuval Steinitz said at the cabinet
“We are nearing the moment at which the Israeli public will be
able to benefit from its natural resources the way it is done in other Western
The recommendations are expected to be passed by the Knesset
over the next few weeks, after opposition leader MK Tzipi Livni on Sunday
expressed support despite some reservations regarding the inclusion of the Tamar
gas find in the new tax regime.
“With regard to the Tamar discovery,
there are reservation in principle about changing the rules set by the
government, after money was invested in the project,” she said. “Nevertheless,
the conclusions reflect a proper balance between encouraging local and foreign
investors to invest in Israel and the basic right of the state to be a partner
in the potential profits from its assets. The state’s revenue should not be put
in the regular budget, but ought to be deposited in a special fund, which will
be invested in education.”