(photo credit: Ariel Jerozlimski)
Prime Minister Benyamin Netanyahu surprised cabinet members Sunday,
hinting that he did not accept the recommendation of the Sheshinski
committee about natural gas taxation.
Sheshinski: The stage is complete; still more we can do Analysis: Gas firm will fight on for more concessions
"Today, after the cabinet meeting, I will meet with members of the
Sheshinski Committee and listen to their comments. Later in the week I
plan to meet with the Infrastructure and Environmental Protection
ministers, as well as with Stanley Fisher. After that I will convene
with the investors of the Tamar company, hear them out, and decide on
the initiative that I will present to the cabinet."
Netanyahu added: "In this matter, Israel must make a critical decision
regarding important natural resources. I will recommend to the
government to establish a national fund for Israel that will take the
fruits of the gas for important causes, security and education."
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
allocate NIS 800 million shekel to an emergency systems budget. From
that NIS 800 shekel, 350 million would be designated for a ground and
air fire extinguishing network.
"These will be run by the Public Security Ministry," he added.