Party subsidies
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Party subsidies or public funding of political parties are
subsidies A subsidy or government incentive is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from the government, the ter ...
paid by the government directly to a
political party A political party is an organization that coordinates candidates to compete in a particular country's elections. It is common for the members of a party to hold similar ideas about politics, and parties may promote specific political ideology ...
to fund some or all of its political activities. Most democracies (in one way or the other) provide cash grants (state aid) from taxpayers' money, the general revenue fund, for party activity. Such funds may cover routine or campaign costs incurred by the party. Among the established democracies the United States, Switzerland and India are the most notable exceptions. Party subsidies can be relatively small (as in the U.K.) or quite generous (as in Sweden, Israel and Japan). In the U.S., the Presidential Fund takes money from the general fund only after authorized by a statement indicated upon a taxpayer's tax return. The recipients of public support (in cash or kind) are party organizations, parliamentary groups (party caucuses) and/ or candidates for public office (parliament or presidency). In combination with rules that enforce fair access to and fair distribution of state aid among the players of the political game, government funding for political activity can be an acceptable policy option for democratic polities. The allocation of party subsidies follows general rules for access to and distribution of such grant, for example access for all parties represented in the national parliament and distribution in proportion to the number of seats held in the current parliament, or in proportion to the number of votes polled in the most recent election. Many subsidy schemes are linked to reporting and disclosure obligations for the recipient parties. Rare instruments of party subsidies are
matching funds Matching funds are funds that are set to be paid in proportion to funds available from other sources. Matching fund payments usually arise in situations of charity or public good. The terms cost sharing, in-kind, and matching can be used interc ...
and
tax credits A tax credit is a tax incentive which allows certain taxpayers to subtract the amount of the credit they have accrued from the total they owe the state. It may also be a credit granted in recognition of taxes already paid or a form of state "disc ...
. Matching funds are granted to a political competitor who has proven to a government authority that he or she solicited small individual donations. Tax credits can be deducted by the taxpayer from tax liability because some part of a political donation is treated like an advance payment on tax. Because matching funds and tax credits depend on financial contributions by individual citizens such support is more compatible with a participatory concept of democracy than flat grants, which do not require specific efforts by the fundraising parties (or candidates). In many democracies public funding for political parties was introduced after scandals, which revealed
political corruption Political corruption is the use of powers by government officials or their network contacts for illegitimate private gain. Forms of corruption vary, but can include bribery, lobbying, extortion, cronyism, nepotism, parochialism, patronage, in ...
or illegal funding, had become public knowledge. In other countries, the rising costs of political competition stimulated the spread of party subsidies (government funding). Although the mainstream opinion is in favour of party subsidies now, they are still disputed. Supporters of party subsidies argue that directly providing the campaign funds reduces
political corruption Political corruption is the use of powers by government officials or their network contacts for illegitimate private gain. Forms of corruption vary, but can include bribery, lobbying, extortion, cronyism, nepotism, parochialism, patronage, in ...
, as parties do not need to raise "money with an opinion/ strings attached".


History

In 1954
Costa Rica Costa Rica (, ; ; literally "Rich Coast"), officially the Republic of Costa Rica ( es, República de Costa Rica), is a country in the Central American region of North America, bordered by Nicaragua to the north, the Caribbean Sea to the no ...
and
Uruguay Uruguay (; ), officially the Oriental Republic of Uruguay ( es, República Oriental del Uruguay), is a country in South America. It shares borders with Argentina to its west and southwest and Brazil to its north and northeast; while bordering ...
were the first countries to introduce party subsidies. They were followed by
Puerto Rico Puerto Rico (; abbreviated PR; tnq, Boriken, ''Borinquen''), officially the Commonwealth of Puerto Rico ( es, link=yes, Estado Libre Asociado de Puerto Rico, lit=Free Associated State of Puerto Rico), is a Caribbean island and Unincorporated ...
in 1957 and
West Germany West Germany is the colloquial term used to indicate the Federal Republic of Germany (FRG; german: Bundesrepublik Deutschland , BRD) between its formation on 23 May 1949 and the German reunification through the accession of East Germany on 3 O ...
in 1959. In the 1960s,
Quebec Quebec ( ; )According to the Canadian government, ''Québec'' (with the acute accent) is the official name in Canadian French and ''Quebec'' (without the accent) is the province's official name in Canadian English is one of the thirtee ...
(1963),
Sweden Sweden, formally the Kingdom of Sweden,The United Nations Group of Experts on Geographical Names states that the country's formal name is the Kingdom of SwedenUNGEGN World Geographical Names, Sweden./ref> is a Nordic country located on ...
(1965), Finland (1967) and Israel (1969) parties received such support. Since the 1970s, party subsidies have been introduced by Norway (1970),
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
and Italy (1974), Austria (1975), the U.S. (1976),
Australia Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...
(1984), Denmark (1986), France (1988), Belgium (1989),
Japan Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
(1994), Ireland (1997),
the Netherlands ) , anthem = ( en, "William of Nassau") , image_map = , map_caption = , subdivision_type = Sovereign state , subdivision_name = Kingdom of the Netherlands , established_title = Before independence , established_date = Spanish Netherl ...
(1999), the U.K. (2000) and New Zealand (2010). Nowadays it is also used in Greece, Portugal, Spain and other more recently established democracies in Europe and Latin America: India and Switzerland stand out as exceptions. In Italy, following the abolition of the state financing of political parties, clear examples are initiatives of Prime Minister
Matteo Renzi Matteo Renzi (; born 11 January 1975) is an Italian politician who served as prime minister of Italy from 2014 to 2016. He has been a senator for Florence since 2018. Renzi has served as the leader of Italia Viva (IV) since 2019, having been ...
who organized on 6 and 7 November 2014, two fund-raising dinners, held respectively in
Rome , established_title = Founded , established_date = 753 BC , founder = King Romulus (legendary) , image_map = Map of comune of Rome (metropolitan city of Capital Rome, region Lazio, Italy).svg , map_caption ...
and
Milan Milan ( , , Lombard: ; it, Milano ) is a city in northern Italy, capital of Lombardy, and the second-most populous city proper in Italy after Rome. The city proper has a population of about 1.4 million, while its metropolitan city h ...
, for the Italian
Democratic Party Democratic Party most often refers to: *Democratic Party (United States) Democratic Party and similar terms may also refer to: Active parties Africa *Botswana Democratic Party *Democratic Party of Equatorial Guinea *Gabonese Democratic Party *Demo ...
.


Criticism

Critics argue that party subsidies: * make parties less accountable to their supporters, because they have less of a need to solicit donations, * petrify the party system and thereby lock the democratic process, because subsidies are distributed based on prior election results and not on current voter attitudes, * make the formation or electoral participation of new parties more difficult, because such parties do not receive public funding right from the start and occasionally private funding is prohibited.The Greens (''Die Grünen'') and the Pirate Party (''PIRATEN'') in Germany are examples to the contrary after they had survived their very first, unsuccessful election bids. Cf. external link to the distribution of party subsidies in that country.


See also

*
Political finance Political finance covers all funds that are raised and spent for political purposes. Such purposes include all political contests for voting by citizens, especially the election campaigns for various public offices that are run by parties and candi ...
*
Political party funding Political Party Funding (PPF) is a method used by a political party to raise money for campaigns and routine activities. The funding of political parties is an aspect of campaign finance. Political parties are funded by contributions from multip ...
*
Political funding in Australia Political funding in Australia deals with political donations, public funding and other forms of funding received by politician or political party in Australia to pay for an election campaign. Political parties in Australia are publicly funded, ...
* Party funding in Austria *
Federal political financing in Canada The financing of federal political entities in Canada (including federal parties, riding associations, candidates, nomination contestants, leadership contestants, and registered third parties) is regulated under the Canada Elections Act. A combi ...
*
Party finance in Germany Party finance in Germany is the subject of statutory reports, which up to 35 parties file annually with the administration of the German parliament. Important questions pertaining to political party funding can be answered by analysing the data g ...
* Political funding in Ireland *
Political funding in Japan In Japan, the problem of political funding was intensely debated during the late 1980s and early 1990s, partly as a result of revelations following the Recruit scandal of 1988-89. History Recruit scandal The scandal arose as a result of the dea ...
*
Party funding in the Netherlands By and large political finance in the Netherlands is a party matter. Compared to other nations the spending level is quite moderate, annually about €2,40 per voter. Sources of funds Quite contrary to most other democracies the major source of pol ...
* Political funding in New Zealand *
Party finance in Sweden Since the 1970s party finance in Sweden on all levels of the political system depends heavily on public subsidies With an estimated SEK 146 (more than $17) per voter a year the spending level is among the highest in the world of established democrac ...


Further reading

* Alexander, Herbert, 'Khayyam Zev Paltiel and the Theories of Public Financing', in: Gagnon, Alain/ Tanguay, Brian (eds.), ''Democracy with Justice. Essays in Honour of Khayyam Zev Paltiel'', Ottawa: Carleton University Press, 1992, pp. 355–369.


References


External links



International IDEA, Political Finance Database, Question 19: Direct party subsidies. * http://aceproject.org/epic-en/CDMap?question=PC12
Subsidies to the parties
Ministry of Justice, Finland (brief explanation in English). {{Political finance Subsidies Political funding
Subsidies A subsidy or government incentive is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from the government, the ter ...