A senior Israel Tax Authority official predicted Monday that payments into a sovereign wealth fund from all the companies producing gas, oil and a range of other natural resources combined are expected to reach NIS 200 billion ($59 billion) only by 2064, with between just $12 and $13.4 billion to be collected by 2030.
The first NIS 1 billion ($291 million) needed to kick off the wealth fund’s operation is expected to be deposited between the end of 2021 and mid-2022.
These figures contrast with predictions made by Prime Minister Benjamin Netanyahu over the past five years that the Israeli public will benefit from the natural gas bonanza to the tune of “hundreds of billions of shekels.”
In February, Netanyahu toned down his expectation, saying “tens, tens of – excuse me – it’s going to reach 150 billion shekels [$44 billion].”
They are also far lower than predictions made several years ago by the Bank of Israel that around NIS 270 billion would be in the fund by 2030.
MK Avi Dichter, the chairman of the Knesset committee overseeing the sovereign wealth fund, said the tax authority’s figure was “disappointing.”
On the basis of Israel’s natural resources belonging to its citizens, all of the companies are supposed to pay 62% on their profits. This is called the government take.
It is made up of corporate tax, royalties and a special levy to be paid into the sovereign wealth fund and used only for projects that benefit the public in areas such as education and health.
The companies have already paid around NIS 12 billion ($3.5 billion) in corporate taxes and royalties.
But the sovereign wealth fund, which has not even been set up, can only begin to operate once at least NIS 1 billion ($291 million) has been levied. The sum raised to date, as the Tax Authority told Monday’s meeting, stands at NIS 474 ($138.8) million.
While the authority would not comment on how that $138.8 million divides between companies, it is understood that some 75% of it was paid in 2013 for the Mari-B Yam Tethys gas field, which closed in 2012, and that the rest came from Israel Chemicals Ltd., which, in addition to the Dead Sea Works, also mines phosphates in the Negev desert.
Monday’s meeting, the fourth of a series of Knesset gatherings about the sovereign wealth fund, saw the Tax Authority give its presentation.
Asked by committee chairman Dichter to explain the shortfall compared to the Bank of Israel’s predictions of NIS 270 billion by 2030, Shlomi Philip, a senior director in the tax authority’s economic division, told the committee that predictions change.
In any case, according to the second quarter report of Delek Drilling — a major player in both the Tamar and Leviathan gas fields — presented to the Israel Stock Exchange on Thursday, it has no immediate plans to pay the levy.
Furthermore, Israel Chemicals, which owns the Dead Sea Works, is stuck in a complex dispute with the tax authority over tax writeoffs connected to some NIS 500 million ($145 million) that the latter says it should already pay into the wealth fund.
The sovereign wealth fund has not yet been set up because a recruitment committee set up several years ago disbanded without recommending any appointments. Monday’s meeting was told that moves are already underway to appoint a judge to head a new search committee.