Israel’s socio-economic cabinet on Monday unanimously approved a proposal to sharply raise taxes on mining activities, saying government coffers would grow by 400 million shekels ($106 million) a year.
In a final report issued last month, a government-appointed committee recommended a progressive tax of 25 percent after companies reach an annual return on investment of 14 percent, rising to 42 percent for a return above 20 percent.
The plan still needs parliamentary approval.
Israel’s government currently takes in about 23 percent in taxation from mining companies but that would ultimately rise to between 46 and 55 percent.
The tax hike drew the ire of the country’s largest mining firm, potash and speciality chemicals maker Israel Chemicals (ICL) .
ICL has said it would cancel planned investments worth 2.5 billion shekels, reevaluate another 3.5 billion, divert investment to other parts of the world, close its magnesium plant and accelerate efficiency plans at its plants in the Negev desert.
“We do not want to harm plants but rather ensure … that the money does not stay with the wealthy few but is returned to the public,” said Finance Minister Yair Lapid, the head of the socio-economic cabinet.
Ahead of the vote, Israel’s Manufacturers’ Association had urged the socio-economic cabinet, which is smaller than the main cabinet but includes the finance and economy ministers, to reject the panel’s recommendations.
“They will almost certainly halt investments and reduce industrial activity in the Negev,” said Zvika Oren, the president of the organisation, adding that the proposals must be examined further. “This is to prevent any possible damages to industry and jobs in the (southern) region.”