MK Dov Khenin (Hadash) and other MKs will this week submit to bills initiated by the Israel Union for Environmental Defense to regulate the industrial operations of Israel Chemicals Ltd. (TASE: ICL) unit Dead Sea Works.
The Dead Sea Protection and Rehabilitation bill deals with the damage caused by Dead Sea Works to the region over the years, and requires the company to repair the damage and prevent more. The Dead Sea Products Profits Tax bill raises the tax take on the use of the Dead Sea's natural resources.
The Israel Union for Environmental Defense and the Movement for Quality Government in Israel stated that if the Dead Sea Products Profits Tax bill passes, Dead Sea Works will pay 10% royalties on potash production exceeding one million tons a year, and it will pay an 80% surtax on the profits. The amount of royalties will be set by total sales by Dead Sea Works' subsidiaries and affiliates, to prevent potash sales at a cheaper price to subsidiaries, which resell it at higher prices to customers around the world.
The bill also proposes oversight mechanisms on the amount of royalties received to ensure that the franchisee pays the state the full amount owed for use of products from the Dead Sea.
"The Dead Sea is a unique landscape and pearl of nature, but regrettably this pearl has been trampled and damaged by short-term special interests and the lack of a comprehensive government policy. These two bills that we are proposing are intended to provide a response to both sides of the problem," said Khenin.
Khenin added, "The bill is intended to sharply raise the public's revenue from resources produced from the Dead Sea. The current level of revenues is even lower than the level on gas wells before the Sheshinski committee. While gas companies could claim that they were undertaking risks in exploring for gas and drilling, the companies at the Dead Sea are taking no such risks."
Currently, Dead Sea Works can pump water from the Dead Sea's northern basin without restriction or supervision. The Dead Sea Protection and Rehabilitation bill proposes that Dead Sea Works will only receive a permit to pump water after the minister of environmental protection is persuaded that there are no alternative technologies for mining minerals from the Dead Sea. The Israel Union for Environmental Defense says that the bill proposes approving the pumping of water to ensure minimum potash production of one million tons a year by Dead Sea Works.
Published by Globes [online], Israel business news - www.globes-online.com - on July 25, 2011
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