Cabinet approves Sheshinski gas tax hike

The Knesset should also pass the proposals, after opposition leader Kadima chair Tzipi Livni said she will support them.

The cabinet today approved the Sheshinski committee recommendations to increase the government's take from oil and gas revenue to 52-62%, from the current 33%, after Prime Minister Benjamin Netanyahu announced his support for them last week.

21 ministers voted in favor of the recommendations, while the five ministers of Israel Beiteinu, Minister of Communications Moshe Kahlon, and Minister without Portfolio Yossi Peled abstained. Kahlon abstained because of ties with Jackob Maimon, the controlling shareholder in Tamar partner Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Peled said that, 20 years ago, he was a partner with Yitzhak Tshuva in Delek Group Ltd. (TASE: DLEKG), which owns stakes in the Yam Tethys, Tamar and Leviathan gas fields.

Minister of Interior Eli Yishai and other Shas ministers voted in favor of the Sheshinski recommendations, but warned that the party would vote against them in the Knesset, unless the spending of the royalties is decided. Yishai said, "At the moment, it is not clear what will happen with the royalties, and the real battle will be fought in the Knesset. I don’t intend to pass the recommendations unless it is clear where the money will go."

At the start of the cabinet meeting, Netanyahu said, "I intend to establish a fund for Israel's future that will be devoted to education and security. The fund's revenues will stem from the natural gas reserves.

"We need to do one thing - decide so that we may forward the matter on to the Knesset, so that it may make its decision. We will cooperate with the investors in order to bring the gas to Israel quickly and so the most important thing now is to move forward."

The Knesset will likely pass the recommendations, after opposition leader Kadima chairwoman Tzipi Livni said that she will support them, despite reservations about not excluding the Tamar find.

Livni said today, "Regarding the Tamar discovery, there are reservation in principle about changing the rules set by the government itself, after money was invested in the project. Nonetheless, the report reflects a proper balance between encouraging local and foreign investors to invest in Israel and the basic right of the state to share in the potential profits from its assets. The revenue should not be put in the regular budget, but should be deposited in a special fund, whose profits will be invested in education."

Published by Globes [online], Israel business news - - on January 23, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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