Netanyahu 'fully accepts' Sheshinski C'tee findings

"The c'tee found proper balance between the needs of Israel's citizens and the investors," says PM on conclusions about natural gas profit taxes.

Netanyahu leaning 311 (photo credit: Emile Salman)
Netanyahu leaning 311
(photo credit: Emile Salman)
Prime Minister Binyamin Netanyahu on Tuesday said that his government fully accepts the recommendations of the Sheshinski Committee in regard to taxation of profits from Israel's natural gas fields.
"The committee found the proper balance between the needs of Israel's citizens and the investors; therefore, I have decided to accept the conclusions," said Netanyahu speaking at a conference of government ministry director-generals in Jerusalem.
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Netanyahu said that he intends to set up a fund for education in elementary schools and high schools with the money earned from taxing the natural gas profits. He added that some of the money would go towards defense.
"There is no doubt that this resource is a strategic point which Israel's enemies will attempt to hurt. Therefore, I decided that Israel will take part in defending the property of this project."
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.
Gas exploration companies including the Delek Group have in recent months waged a battle against the recommendations, putting intensive pressure on decision-makers and threatened that they will stop the development of projects.
The cabinet is expected to approve the Sheshinski Committee’s recommendations next month. They would then need to be passed into law by the Knesset. The Finance Ministry expects that the final vote will be taken in mid-April.
Sharon Wrobel contributed to this report