Well after schedule, Israel will launch its sovereign wealth fund this week, when Minister of Finance signs the order to establish it on June 1. This follows the announcement by Israel Tax Authority head Eran Yaacov that the levies collected under the Natural Resources Profits Law has exceeded NIS 1 billion.
Israel's sovereign wealth fund is supposed to contain all the revenues that enter the state coffers from the excess profit taxes that have been imposed on Israel's gas fields since 2011 (Sheshinski 1), as well as the revenues from excess profit taxes imposed on natural resource production since 2016, including potash, bromine and phosphates (Sheshinski 2).
The law establishing the sovereign wealth fund was enacted in 2014. The fund is designed to manage the revenues to maximize the long-term interests of Israel's citizens for generations to come.
According to the law, the fund can start operating as soon as the NIS 1 billion threshold has been crossed. 12 months after that date, which will be June 1, 2023, the fund can begin distributing up to 3.5% of its revenues annually for social, economic and educational aims according to proposals submitted to the government and subject to approval by the fund's institutions headed by its council.
The fund has accrued NIS 1.14 billion to date with an additional NIS 0.836 billion in levies collected from natural resources that have not yet been placed in the fund because they have not yet been part of the companies' annual reports. Thus the sovereign wealth fund would actually have a total of NIS 1.950 billion. Most of the money to date has come from the Tamar gas field.
Minister of Finance Avigdor Liberman said, "The money is coming back to the citizens. The profits from Israel's natural resources must be for the benefit of the citizens and I am delighted that within a year of establishing the government the fund will begin to work and tens of millions of shekels will flow back to the public."
Published by Globes, Israel business news - en.globes.co.il - on May 30, 2022.
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