Israel’s Tax Authority announced Tuesday that a total of NIS 15 billion has entered state coffers from sales of Israeli natural gas in the period between January 2011 and September 2021.
Amir Foster, CEO of the Israeli Oil and Gas Exploration Industries Association, said Tuesday in a tweet (Oct. 12) that NIS 1 billion alone was collected from the “Sheshinski Tax,” projected to reach NIS 10 billion by 2030.
מכירים את הפרופגנדה שלא נכנס כסף מהגז?
היום פרסמה רשות המסים שלקופת המדינה כבר נכנסו 15 מיליארד ש׳ מהגז.
ומה לגבי קרן העושר? עד כה נגבו כמיליארד ש׳ מהיטל שישינסקי וב2030 יהיו שם 10 מיליארד. הנה מצגת של רשות המיסים לגבי העתיד. למי שמעוניין במספרים ועובדות ולא באקטיביזם ונראטיבים pic.twitter.com/pRSqaP36HU
— Amir foster (@FosterAmir) October 12, 2021
The coffers of the Sovereign Wealth Fund were also swelled with some NIS 1 billion collected from the Sheshinski tax, projected to reach NIS 10 billion by 2030.
The Sovereign Wealth Fund, managed by the Bank of Israel and established established in order to handle projected future windfall profits expected from the discovery of the Tamar and Leviathan gas fields, is intended to ‘manage these revenues with a long-term vision to maximize them and to enable those revenues to exist for many generations,” according to the Bank of Israel website.
In November 2010 the International Monetary Fund recommended in its Article IV Consultation that Israel set up the fund. The OECD likewise made the same recommendation in 2011, and estimated that its size by 2040 would be between $40 billion and and $175 billion — between 10 and 50 percent of Israel’s GDP — depending on the rate of new discoveries. The law establishing the fund was passed by Knesset in July 2014.
This year was the first time the state collected the Sheshinski Tax on profits, since the law states that the fund will begin operating a month after the state’s tax revenues from natural gas exceeds NIS 1 billion. Revenues this year from the Sheshinski Tax did indeed, as was projected, exceed NIS 1 billion in the fund for taxes from those who own the rights to the Tamar, Leviathan, Karish and Tanin natural gas reservoirs.
Last year, revenues of more than NIS 1 billion were reported (2020) for the first time (NIS 1.105 billion) from fees and natural gas and quarried mineral royalties – an increase of NIS 241 million over revenues collected in 2019 — according to the revenues report from the Energy Ministry’s Royalties, Accounting and Economics Division of the Natural Resources Administration.
The main portion of the 2020 revenues came from natural gas royalties, which totaled approximately NIS 1.09 billion. In addition, revenues of approximately NIS 8.7 million were recorded from quarried mineral royalties.
Israel’s Energy Ministry is expecting record royalty revenues of approximately NIS 1.15 billion in 2021.
About the Sheshinski Committee
The Sheshinski Committee, headed by Eytan Sheshinski, was directed by the Israeli government more than 10 years ago to consider taxation on the oil and natural gas discoveries in Israel, and recommend changes in fiscal policy for the sector.
In January 2011, the committee recommended in its final report that Israel increase its share of future oil and gas revenues from a 25 percent gas tax (GT) at the time – the lowest in the world — to between 52 and 60 percent. Royalties were to remain unchanged at 12.5 percent.
The Organization for Economic Cooperation and Development (OECD) Monetary Fund approved the recommendation.