Small investors campaign against higher taxes on gas finds

“The recommendations of the Sheshinski Committee will do great damage to everyone. They are a mistake.”

leviathan gas drill (photo credit: (Albatross))
leviathan gas drill
(photo credit: (Albatross))
Small investors in oil and natural-gas exploration shares and holdings on Tuesday officially launched a media campaign against the Sheshinski Committee’s recommendations to raise taxes on gas and oil profits.
“The public is the real investor – that is the average Israeli investor, not wealthy tycoons – who are also the ones who will be hurt most by higher taxes on oil and gas profits,” Motti Morell, a media advisor who is heading the media campaign, said Tuesday at a press conference in Tel Aviv. “About 70 percent of the holdings in the gas and oil sector are in the hands of the public.”
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The small investors who have invested in Givot Olam, Isramco, Ratio Oil Exploration and other companies have in recent weeks started to wage an aggressive campaign on the Internet and other media claiming they will be left with almost nothing if the Sheshinski Committee’s recommendations to raise taxes on gas and oil profits are adopted. About NIS 500,000 has already been raised through donations via the Internet to fund the campaign, Morell said, adding that the group expects to raise more than NIS 1 million for the campaign.
The Sheshinski Committee recommended to levy a progressive tax on part of the gas and oil companies’ profits. The tax would be levied on the profit made by all the gas and oil companies actively exploiting natural resources, after they recouped 150% of their investment on the projects. The tax rate would range from 20% to 60%, depending on the volume of the profits.
“Fifteen years ago, we started to invest money in Givot Olam and other gas shares out of Zionist reasons,” said Shoshana Weinberger, a Holocaust survivor, who was among four small investors who spoke at the press conference. “We hoped that after a long period, during which we invested and suffered great losses, we would finally bear the fruits of success. Unfortunately this hope is now being buried because of the Sheshinski Committee. The committee is unilaterally recommending a tax reform and a change in the profits of small investors.”
Also speaking at the conference, Ehud Shlush said he had invested in Givot Olam in the past and lost close to NIS 250,000.
“Throughout the years, the government didn’t want to invest because they didn’t believe in any finds after many failures, and instead the public had to risk their money,” Shlush said. “After a long break, I decided to join Isramco and invest in other gas and oil shares as a long-term investment. I invested because I am self-employed and don’t have a pension fund. I was hoping that the part of the profits generated from the gas finds would turn into my pension.”
Oil and gas exploration firms are organized as general partnerships, while small investors have bought participation units or limited holdings in the partnerships, or shares.
Morell said the gas tycoons, who are general partners, would not be hurt by the Sheshinski Committee’s recommendations because they will get their percentages from agreements between the partnerships, or get their shares out of the revenues, only thereafter taxes and expenditures are subtracted.
“There is a conflict of interest between small investors and companies,” he said. “The recommendations of the Sheshinski Committee will do great damage to everyone. They are a mistake.”
On Monday, MK Shelly Yacimovich (Labor) criticized the small investors’ media campaign, saying their investments in the gas and oil sector were as irresponsible as betting in a casino.
“If people put money intended for their children’s future in the riskiest stocks on the Tel Aviv Stock Exchange, they are abandoning their responsibility toward their children,” she wrote in a blog. “The question is who is behind these small investors who advertise big announcements costing hundreds of thousands of shekels.”