Finance C'tee Passes Sheshinski Bill, With Changes

At the last minute, however, 14 changes were made in the bill in response to pressure from the gas exploration firms and their army of lobbyists.

The Knesset Finance Committee approved a bill raising taxes on profits from oil and natural gas production yesterday evening. It will be put before the Knesset plenum for final approval next week.

At the last minute, however, 14 changes were made in the bill in response to pressure from the gas exploration firms and their army of lobbyists. MKs, mostly from the coalition, forced Finance Minister Yuval Steinitz to agree to the changes in return for their support for the bill. Rough estimates value the additional benefits for the gas companies at a few billion shekels - on top of some NIS 30 billion worth of changes the companies had extracted from the politicians previously.

The bill is based on the recommendations of the Sheshinski Committee, which studied fiscal and tax policy relating to Israel's natural resources.

Various MKs on the Finance Committee, led by committee chairman Moshe Gafni (United Torah Judaism ) and Zion Fanian (Likud ), held repeated meetings with Steinitz yesterday. The changes were agreed on at these meetings. But the coalition also defeated a large number of other amendments presented by opposition MKs, which would have given the gas companies even larger breaks.

In the end, MKs from almost every faction voted for the bill: Shas, Likud, Yisrael Beiteinu, UTJ, Labor, Kadima, Habayit Hayehudi and United Arab List-Ta'al. But MK Uri Ariel (National Union ) voted no in almost every vote on the 48 articles of the 29-page bill.

Three MKs participated in the vote even though they did not attend committee hearings on the matter: Tzipi Hotovely (Likud ), David Rotem (Yisrael Beiteinu ) and Shlomo Molla (Kadima ), each of whom replaced an MK from their own party who sits on the committee.

At the beginning of yesterday's committee session, Steinitz said he had agreed to MKs' requests to establish a special national fund for the gas profit taxes. He said he will present the cabinet on Sunday with a proposal to establish a committee to study existing models for such funds from around the world and then propose a solution for Israel. Prof. Eugene Kandel, who chairs the National Economic Council in the Prime Minister's Office, will head the committee. The funds will be used for social and economic goals, Steinitz said.

But the Finance Committee was not satisfied with Steinitz's promises and added a requirement to establish such a fund to the bill. Kadima had made the establishment of such a fund a condition for its support for the bill.

Steinitz also committed to make no further changes in the tax regime on the gas exploration industry for the next 10 years.

"The present situation, in which the state's and its citizens' share of gas and oil resources is the lowest in the world, is unacceptable economically, socially and morally," Steinitz told the committee. "We are correcting that, and thus strengthening the view of Israel as a proper democratic state."