(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.
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"Today, after the Cabinet meeting, I will meet with the members of the Sheshinski Committee and will hear their recommendations. Later in the week, I will meet with the relevant ministers: Finance Minister Yuval Steinitz, National Infrastructures Minister Uzi Landau and Environmental Protection Minister Gilad Erdan, as well as with Bank of Israel Governor Stanley Fischer. Afterward, I will meet with the investors from "Tamar". I will make a decision and will submit my recommendation to the Cabinet within a short time, at one of our upcoming meetings, for their approval."
Netanyahu added: "Thus Israel will make a critical decision regarding a natural resource that is important for our future. I will recommend that the Cabinet establish a national fund to utilize the fruits of our gas reserves for several goals, with security and education foremost among them."
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 submit a
comprehensive, NIS 800 million shekel proposal for national emergency
preparedness against distastes. From that NIS 800 shekel, 350 million
would be designated for an "upgraded national fire service and an aerial
firefighting force." The proposal also includes the leasing and
eventual purchasing of firefighting planes. Netanyahu said: "I spoke
with Canadian Prime Minister Stephen Harper last Friday regarding
possible bilateral arrangements to purchase Canadian planes, which are
the best in the world for this kind of mission."
"The new fire service will be part of the Public Security Ministry," he added.