07/13/2010 23:41

Yacimovich: ‘This is a battle for a fair distribution of national resources’

A private member’s bill to raise gas royalties and increase taxes on natural resources was submitted to the Knesset on Tuesday by coalition and opposition MKs.

“In our battle, we are undoubtedly going to face a strong opposition lobby of interest groups, even though it is a just and necessary economic, social and environmental battle that will have historic significance for Israeli citizens,” Labor MK Shelly Yacimovich said Tuesday. “This is a battle for a fair distribution of national resources.”

The National Fund for Natural Resources and Social Development bill was submitted by Yacimovich, Likud MK Carmel Shama, Shas MK Yitzhak Vaknin, Knesset Finance Committee chairman MK Moshe Gafni (United Torah Judaism), Kadima MK Ya’acov Edri, Habayit Hayehudi MK Uri Orbach, Meretz MK Nitzan Horowitz, Hadash MK Dov Henin and National Union MK Arye Eldad.

The current rate on revenue from natural resources, a maximum of 25 percent, is one of the lowest in the world. Since the law was established in 1952, the royalties rate on gas and oil revenues was fixed at 12.5%.

The bill would gradually raise royalties on natural resources to 20%. So that producers can make a return on investment in a short time and to encourage fast development and production of resources, the royalties rate would be fixed at 10% for the first five years of production.

The bill would establish a national investment fund for government proceeds from the royalties. It would be chaired by the finance minister and include the governor of the Bank of Israel, representatives from various government ministries, the Histadrut Labor Federation chairman, and the Israel Manufacturers Association president.

The Bank of Israel would manage the fund, which will be used for longterm investments.

The bill would levy a higher tax on the profits generated from the production of natural resources, something that is being considered in other countries including the US and Australia.

The bill would tax revenues from the production of natural resources at a rate of 60%. Current tax benefits or other tax breaks for companies involved in the production of natural resources would be canceled.

Finance Minister Yuval Steinitz has said in recent months that the government would propose legislation to increase the state’s share of future gas revenues. He established a committee to review the current law on gas royalties and taxes from oil and gas discoveries.

The committee is expected to present its recommendations next month.

The bill recommends adopting the Norwegian method of establishing a sovereign fund to invest most of the gas royalties in world markets.