Israel Chemicals Ltd. (TASE: ICL) CEO Stefan Borgas appeared today at a Sheshiniski 2 Committee hearing at the Ministry of Finance, together with senior company executives, and warned that implementation of the committee’s recommendations would cause the company damage amounting to NIS 7 billion.
The calculation, according to Israel Chemicals, is based on the Sheshinski Committee’s own estimates, according which the recommendations will cost the company NIS 500 million a year for fourteen years.
Borgas issued a veiled threat, hinting that Israel Chemicals would move its activity abroad, saying, “Though we can’t take the Dead Sea out of Israel, the world does not need the Dead Sea.” He repeated the fact that Israel Chemicals halted investments of NIS 2.5 billion and said that Israel was a country in which it was difficult to invest, because of frequent regulatory changes.
“When there is a lot of regulation, the investing community notices as well,” said Borgas. He spoke of the “lack of worthwhile investments” in Israel and the fact the “investment conditions have worsened.”
He asked the committee members repeatedly what they would do in his place: “What would you do? Would you put money in a place with poor conditions? All the countries in which we operate ask us to increase activity, and conduct discussion with us. There is a surplus of potash production, prices have dropped. What would you do in our place? Look at Israel Chemicas' long-term contribution.”
The Sheshinski 2 Committee recommended imposing a natural resource tax (excess profits tax) of 42%, which would yield half a billion shekels a year for the government, and a uniform royalty of 5% on natural resources. Under the proposals, Israel Chemicals' royalties will be reduced from the 8% it currently pays, but will have to pay a high excess profit tax, which it does not pay today.
Published by Globes [online], Israel business news - www.globes-online.com - on August 4, 2014
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