Panel members recommend setting a uniform royalty rate on all natural resources of 5%, to remain consistent with global standards.

Adam Teva V’Din (Israel Union for Environmental Defense) and the Movement for Quality Government on Monday slammed the Sheshinski 2 for taking a conservative stance with regards to the country’s natural resource policies.

The Sheshinski 2 Committee, headed by Prof. Eytan Sheshinski, was tasked last year with reviewing the state’s royalty policies for the exploitation of nature resources – excluding oil and gas, whose royalty policies were decided during the first Sheshinski Committee in 2011. The second committee, which has been meeting periodically since last summer, recommended in May that the government impose a surtax of 42 percent on the excess profits of natural resource developers, and thereby boost the state’s coffers by NIS 500 million annually.

In addition to evaluating tax rates, the Sheshinski 2 panel members recommended setting a uniform royalty rate on all natural resources of 5%, to remain consistent with global standards.

Immediately following the announcement of these recommendations, Adam Teva V’Din, various environmental organizations and MK Dov Henin (Hadash) criticized the surtax rate as problematically low.

On Monday morning, in preparation to appear before a Sheshinski Committee meeting later that day, Adam Teva V’Din and the Movement for Quality Government presented their objections to the recommendations.

Among other things, the organizations faulted the Committee with ignoring critical information in determining their formula for tax calculation, such as resource availability, resource quality, existing technologies, export and import volumes, present economic needs and future consumption.

Before formulating a tax policy, the government must collect comprehensive information about infrastructure and set a long-term policy on natural resource management, the organizations said.

“The committee’s interim conclusions continue the current trend in which huge profits that come from the use of natural resources do not reach the pocket of the public, the real owners of natural resources,” the organizations wrote in an official opinion to the committee.

“This continues the trend, the carte blanche that is given to entrepreneurs to come and utilize the resources without restrictions or a long-term strategic policy.

Moreover, the continued costs of environmental and health damage caused by the exploitation of resources also continues to fall on the shoulders of the public.”