Israel's wealth fund delayed again as tax revenue still short

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JERUSALEM, July 5 (Reuters) – Israel’s sovereign wealth fund will not start operating until at least 2022 since taxes on profits from natural gas and other resources remain far below the minimum needed to begin investing, the Israel Tax Authority said on Monday.

The minimum needed is 1 billion shekels ($307 million).

But the authority said it only had collected 741 million shekels through June, including advance payments, although only 441 million shekels of that is absolute, with the rest not final pending companies’ 2021 annual reports.

“Total absolute revenue from taxes are expected to exceed 1 billion shekels during 2022,” the authority said.

Israel discovered huge deposits of natural gas in the east Mediterranean a decade ago and major production began in 2013.

The wealth fund, aimed at staving off an overheated currency from the sudden explosion in national wealth — known as the Dutch disease — was supposed to begin in 2018, but political turmoil and a slower stream of revenue have caused delays.

Former Prime Minister Benjamin Netanyahu had said tens of billions of dollars raised from taxing natural gas sales would be invested abroad via the sovereign wealth fund, with proceeds brought home for education, welfare and other services.

($1 = 3.2607 shekels)

Reporting by Steven Scheer Editing by Ari Rabinovitch

Our Standards: The Thomson Reuters Trust Principles.

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