Sheshinski and Steinitz 311 .
(photo credit: Marc Israel Sellem)
With broad-based support among both coalition and opposition members, the
Sheshinsky Commission’s recommendations sailed through their first Knesset
reading by a vote of 38 to eight Monday night.
recommendations, which opponents claim could dissuade potential investors in
Israel’s natural resources, will now be prepared for their second and third
readings in the Finance Committee.
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“Israel currently holds the lowest
place in the world in terms of taxation of gas resources,” Finance Minister
Yuval Steinitz told MKs, explaining why they should join the government in
supporting the legislation.
“Other than the regular corporate tax, the
state receives no additional benefit other than the fact that the energy
companies use Israel’s natural resources.”
Steinitz said most Western
states that discover oil raise their taxes, adding that the “average percentage
of a state’s take is around 60 percent, while Israel will receive 50%-60% on
He went on to assure MKs that “this income will become
significant around 2015 or 2020 – and will be important for the state,” calling
the hundreds of billions of shekels “a massive sum that can serve education,
welfare, national strength and the entire Zionist effort. We are doing something
from which we and our children will benefit, and there is no disproportionate
harm to investors.”
Earlier in the day, the Likud Knesset faction
received a pep talk in support of the government- sponsored legislation from
Prime Minister Binyamin Netanyahu and Prof. Eitan Sheshinsky, who headed the
“We ask today to pass the recommendations issued by Prof.
Sheshinsky – it is essential to the realization of Israel’s natural gas
resources, and the faster we move, the better,” the prime minister told his MKs.
“I ask faction members to unify and pass the bill through its first reading,
after which we will make a great effort to pass it through its second and third
readings. It is part of the process of creating energy sources for the state of
Israel, which is always important, and especially so at this time.”
while Netanyahu called for faction – and coalition – unity, Israel Beiteinu MKs
voted against the Sheshinsky Commission’s recommendations.
Infrastructures Minister Uzi Landau has consistently opposed the committee’s
findings, arguing that increasing taxation for gas companies will dissuade
future investors from developing Israel’s natural resources. On the opposite
side of the aisle, Labor and Meretz MKs promised to support the government’s
efforts throughout the legislative process.
Among the committee’s
recommendations is an increase in government oil and gas profit revenues from
approximately 33% today to over 50%. The vote on Monday approved the majority of
the recommendations, but coalition officials said some would be issued as
protocols and guidelines rather than passing through the legislative
Although the bill is expected to advance smoothly with
government support, its immediate future is still uncertain. There is a
difference of opinion within the Knesset as to whether the legislation should be
referred to the Economic Affairs Committee or the Finance Committee; therefore,
its next stop is the House Committee, where MKs will decide where the bill will
be prepared for its final readings.
Coalition Chairman Ze’ev Elkin
(Likud) said that Knesset legal advisor Eyal Inon had ruled that the Finance
Committee was the most appropriate destination for the bill, but added that the
coalition would seek to find a compromise that satisfies all parties.
likely outcome – should Finance Committee chairman Moshe Gafni (UTJ) be willing
– is to form a joint committee of the two committees under Gafni’s
House Committee chairman Yariv Levin (Likud) said Monday that
he, too, was interested in finding a fair and balanced solution to the question
that would satisfy those concerned about investors’ rights as well those who
want to ensure the state reaps the financial benefits of its natural
Levin added that he believed the legislation must be prepared
with a finger on Israel’s strategic pulse, taking into consideration the
geopolitical situation. Israel currently receives much of its natural gas
through a pipeline that originates in Egypt, and which has been threatened by
the political turmoil taking place inside Israel’s southwestern neighbor.