Israel Approves Doubling Oil & Gas Taxes

January 31, 2011 by  

Israel Approves Doubling of Taxes on Oil and Gas Extraction Profits

New York Times By ETHAN BRONNER

Published: January 23, 2011

  • JERUSALEM — The Israeli government on Sunday approved a near doubling of the profit tax on gas and oil extracted from its territory, a move of considerable significance in the wake of recent offshore gas discoveries expected to be worth tens of billions of dollars.

The cabinet voted overwhelmingly to accept the recommendations of a government committee to tax energy profits between 52 and 62 percent and to set aside a special fund from the income aimed at a range of public needs.

“I intend to establish a fund for Israel’s future that will be devoted to education and security,” Prime Minister Benjamin Netanyahu said at the cabinet meeting. Parliamentary approval is considered a certainty, but debate will doubtless occur on the priorities of the new fund.

In the past few years, about 25 trillion cubic feet of natural gas have been discovered off Israel’s northern shore, enough to turn it from a vulnerable energy importer into a robust exporter. In recent weeks, exploration companies have announced a 20 percent likelihood of there being four billion barrels of oil under the gas, which could prove still more significant.

The companies, along with some conservative political forces, have fought hard against any increase in the profit tax, saying that the cost of exploration is so high that the rate will endanger the viability of the enterprise.

But Eytan Sheshinski, a Hebrew University economist who led the government committee that recommended the increase, said the new rate was slightly below the average of the Organization for Economic Cooperation and Development, a group of more than 30 countries that Israel recently joined.

“We often chide ourselves in Israel that our policy-making decisions lack real planning,” Mr. Sheshinski said in a telephone interview. “Yet here was a process in which the committee sat for nine months, taking testimony that added up to thousands of pages. This was a real process of which we can all be proud.”

Finance Minister Yuval Steinitz said after the cabinet vote, “Today the government will put an end to the disgrace in which the citizens of Israel do not benefit from the country’s natural resources, as do the citizens of other developed nations.”

Be Sociable, Share!

Comments

3 Responses to “Israel Approves Doubling Oil & Gas Taxes”

  1. Thelma Davis on January 31st, 2011 12:25 pm

    Oh! Thank you for the information. I am thrilled at the news of oil already being produced in Israel. I have long prayed for this.

    My sons are in the oilfield service business, and I started praying for oil discovery in Israel, while they were still very young. I pray someday, for their technology and tools, used in deep water drilling, to benefit Israel. The Lord bless you and all you do for Israel. Thank you again for sending me the news. Sincerely, Thelma Davis, Hoston, Texas

  2. Ken on January 31st, 2011 4:15 pm

    What will this mean for Zionoil?? I last read they had to give Israel 12.5 percent of whatever they produce and that has been stable for the whole time Zionoil has been exploring for oil. Will this now change their agreement with the Israeli government when oil is produced? Your article says between 52 and 62 percent tax……… That sounds like they would be taking over half of the profits from any oil company producing in Israel. DO I UNDERSTAND THIS CORRECTLY? More than half of the profits????? Who would agree to do business with a tax that high? Please help me understand.

  3. Spencer on February 10th, 2011 12:06 pm

    Hello, I know there is oil in Israel, God has shown me where one of the big oil fields is located, Dead Sea area. Also, I have been called to help Israel in regards to finding this oil, since 1990 when I came over to Israel with Ness Energy’s president, Hayseed Stevens. I believe, like many others, that the spoil they come down to take is oil.
    What is very interesting is that this call lay dormant after the early nineties until I was reading Joel’s book, Epicenter. When I came to the part where Joel says, he believed the spoil they would come down to take was oil, God showed up in my bedroom and let me know that the call to find this oil was still on my life. Lot more to all this of course, but just wanted to send you this you.

    Thank You,

Feel free to leave a comment...
and oh, if you want a pic to show with your comment, go get a gravatar!