As the Knesset prepared to disband for elections on Monday night, the Knesset Finance Committee took just minutes to approve legislation that would grant tax credits worth up to NIS 2 million for contributions in support of settling the land, including settlements in the West Bank.

If the bill is passed on second and third reading by the full Knesset as expected, it could cost the state budget about NIS 850 million a year in lost tax revenues.

Currently such a tax credit is available to donors to educational, cultural and social institutions, but not organizations supporting settlement. The bill is sponsored by coalition chairman Zeev Elkin (Likud ) and Zion Pinyan (Likud ), who is the coalition whip for the Finance Committee.

Today the committee is also due to consider the transfer of a number of sums within the framework of the state budget. Coalition MKs are pressing for approval of a number of shifts in budget allocations that support for their own constituencies, including funding for the ultra-Orthodox community, immigrants and West Bank settlement activity.

The proposal that passed the Finance Committee yesterday would, if passed into law, provide a tax credit worth 35% of contributions to institutions that promote settlement of the land across the country, including the Negev and the Galilee, as well as across the Green Line in the West Bank.

The credit would apply to donor contributions of up to NIS 2 million a year, meaning that the donors could get up to NIS 700,000 in tax credits on their contributions to such organizations.

The tax benefit would apply both to donations to organizations establishing new communities as well as those encouraging increasing the population in existing communities.

Opposition members contend that the bill is aimed at encouraging West Bank settlement activity, but its advocates counter that it is also meant to promote settlement activity throughout Israel proper, including for non-Jews.

An initial draft of the bill made reference to "Zionist" settlement of the land, but the word was deleted due to the objection of Knesset legal adviser Eyal Yinon, who said the language could present concerns regarding the bill´s constitutionality and unequal application.

Although Finance Committee Chairman Moshe Gafni (United Torah Judaism ) expressed support for the legislation, he acknowledged that he recently received a legal opinion from Hebrew University legal scholar Frances Raday, who urged that it not be put to a vote as long as the bill did not exclude the West Bank from the tax credits, saying that providing the tax credits in support of West Bank settlement activity would be contrary to international law.

Gafni said, however, that the concerns were not relevant, and donations for all settlement were entitled to tax breaks.

Yesterday´s quick Finance Committee vote was attended by only five MKs: committee chairman Moshe Gafni (United Torah Judaism ); the bill´s sponsors, Elkin and Pinyan; Uri Ariel (National Union ); and Shachiv Shnaan (Atzmaut ). Opposition members on the committee only showed up after the bill passed the committee. (© Copyright 2012 Ha´aretz 05/08/12)