The Knesset Finance Committee has approved the Sheshinski legislation to increase the government's take on oil and gas revenues, after long debate filled with reservations raised by committee members.
Yesterday's discussion opened late, due to the terrorist attack in Jerusalem. Minister of Finance Yuval Steinitz opened the discussion by saying, "This isn't "anti" legislation; it's "pro" legislation. We're not against the gas companies, I owe a great thanks to Eytan Sheshinski, who did good work for a whole year.
"We're going to correct a distortion, and do the right thing today. The vote will correct an error and restore the trust of Israel's citizens. The current situation, in which the government's take from the country's natural treasures is the lowest in the world, is economically, socially, and morally wrong. We're going to correct that today.
Steinitz promised to submit this year a bill to set up a sovereign investment fund into which the gas royalties will be deposited. "Within two week, a committee chaired by Eugene Kandel will be set up to formulate the structure of this fund, including socioeconomic goals." National Economics Council chairman Kandel was a member of the Sheshinski committee.
Steinitz left the committee room after his remarks, and the Finance Committee began voting on the bill's 48 clauses and all the reservations raised by coalition and opposition MKs alike. The committee rejected a reservation by MK Ronit Tirosh (Kadima) to recognize gas and oil exploration companies' financial expenses during the operating period. Current recommendations recognize expenses only during the set-up stage.
Two fiercely debated reservations to the bill, which passed in the initial vote, failed in revotes. One was a proposal by Tirosh and other MKs to equalize taxes paid by private investors to the company tax, and to cap it at 50%. Israel Tax Authority director general Yehuda Nasradishi said, "If this proposal is passed, it will create Israel's greatest tax haven." The proposal fell in a revote by name.
A proposal by MK Shelly Yacimovich (Labor) and MK Carmel Shama (Likud) to cap executive salaries, including options, at oil and gas exploration companies to 50 times the salary of the companies' lowest-paid employees, including contract employees, as a condition for recognizing a company's expenses for tax purposes, also fell in a revote on the specific proposal, after the vote on all the general clauses.
It should be noted that executives at oil and gas exploration companies have options worth millions of shekels, making that clause especially dramatic.
Today, Steinitz told “IDF Radio" (Galei Zahal), "Yesterday was a historic day."
Asked about the pressures on the Sheshinski committee during its work and on the Finance Committee, Steinitz said, "There was a legitimate fight, and it sometimes went over the line, but the fact is that the result was best and most proper result, both economically and morally."
Published by Globes [online], Israel business news - www.globes-online.com - on March 24, 2011
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