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Thursday March 28, 2024

Global laws on donations, political finance

By Sabir Shah
July 21, 2018

Although the ECP has increased the ceiling of electioneering expenditures for candidate taking part in July 25 polls, some key issues like limitation on donations received by political parties perhaps needs to be addressed more adequately and strictly, as is being done by many countries around the globe.

The ECP has raised the electioneering spending ceiling for National Assembly candidates to Rs 4 million (up from Rs 1.5 million), and has allowed candidates for provincial assemblies to spend Rs 2 million (up from Rs one million) for electioneering purposes, but the expenses being incurred by aspirants on expensive panaflexes, banners and large billboards on roads in every city, corner offices with furniture, three-time food for supporters, vehicles and petrol, cavalcades for rallies, helicopter rides and meeting "other" demands of voters etc are surely a lot more in most cases than the thresholds fixed by the ECP.

There is no doubt that money is necessary for inclusive democracy and effective governance, allowing candidates and parties to reach out to voters and for the building of long term political platforms organizations, but it can also lead to politicians listening to their donors rather than their voters.

Resultantly, as we often see, government contracts are awarded not to the company with the best bid but to the one that provided most money during the last election campaign.

It is because of these reasons that political financing has become such a hotly-debated issue, even in developed democracies.

The International Foundation for Electoral Systems, a Washington DC-based non-profit organization, has viewed: "In democracies all the over the world, the role of money in politics is a controversial and often polarizing issue. While political financing is a necessary component of any election, regulating, such financing can be a difficult balancing act and potentially impinge upon citizens’ ability to have a voice. Public financing is both pervasive, with most countries in the world providing some type of public funding, and varied, as democracies and authoritarian regimes regulate political finance laws and implement public funding in a host of different ways."

Research conducted by the "Jang Group and Geo Television Network," by seeking help from the United States’ Library of Congress, reveals that various nations have enacted regulations on campaign financing, spending thresholds/ceilings in national elections and have set limits on donations received by their political entities from both foreign and local sources.

As 105.96 million registered Pakistani voters brace for general elections on July 25, let us see what a few countries of the world are doing to frame laws on campaign finance and donations received by political parties.

Research shows that on April 2, 2017, according to the "Hindustan Times," the Indian government had lowered the limit for cash donations to political parties from Rs. 20,000 to Rs. 2,000. It had insisted that corporations should also refrain from cash giving, requiring them to donate via cheque or digital payment.

The Finance Bill presented in Indian parliament had also introduced the concept of an "electoral bond," by which corporations could purchase time-limited bearer bonds from scheduled banks and transfer those bonds to registered bank accounts of political parties.

While these funds would flow through the banking system (rather than under the table), corporations could not be obliged to disclose their purchases nor are parties required to report their deposits.

The Modi regime also abolished the provision that firms must declare their political contributions on their profit and loss statements.

In a bid to clamp down on cash in politics and to introduce transparency in electoral funding, the Indian government hence legally allowed the corporations to give unlimited sums to political parties, all without having to disclose a single rupee.

In Finland, donation limits for candidates contesting for Finnish parliament have been fixed at 6,000 Euros per election from same donor.

Donation limits are unlimited from party and the amount provided by party organization does not include the contributions received from donor exceeding cap. For Presidential candidates, there are no donation limits.

Donation limits of up to 30,000 Euros from same donor per calendar year have been fixed for the Finnish political parties.

In Austria, there are no limits on donations. The spending limit for federal presidential candidates of political parties in Austria is 7 million Euros.

The individual candidate’s spending counts toward party limit, unless sum does not exceed 15,000 Euros. No specific provisions are found in the Federal Act on the Austrian Broadcasting Corporation about media access or free airtime.

Japan applies different restrictions depending on what house of the legislature a candidate is contesting for.

Hence, Japan and Finland are among nations where there are no spending limits for political parties.

In Canada, spending limits for candidates are calculated according to formula involving number of electors in the district, geographic size of district, length of election period, and an inflation adjustment factor.

On the other hand, the spending limits for Canadian political parties are calculated using a formula that involves the number of electors in districts in which a party has candidates, length of election period, and an inflation adjustment factor.

Then, there is base limit of Canadian dollars 150,000 on election advertising by third parties in a 37-day election period. This limit can be increased if election period exceeds 37 days.

The donation limits for Canadian political parties and candidates is Canadian $1,525 per calendar year. The limit is the same for nomination contestants and candidates of each of the registered political parties.

A nomination contestant is permitted to give an additional $1,000 in total per contest in contributions, loans and loan guarantees to his or her own campaign. And a candidate is permitted to give a total of $5,000 in contributions, loans and loan guarantees to his or her campaign.

In Israel, donation limits are generally based on number of eligible voters and position for which candidate is competing. In national elections, the candidate list or faction that notifies of its intention not to receive government funding may receive higher amounts.

The spending limits in Israel are calculated according to a formula involving multiplication of set monetary amount by number of Knesset (Parliament) members a faction has on specified date.

In Israel, free broadcasting time is allocated to each participating party and candidate list during 14 days prior to elections based on a certain formula.

In New Zealand, there are generally no limits on donations to candidates or parties from local sources. An anonymous donation or overseas donation to candidate or party cannot exceed NZ$1,500. In three months before election, candidates can spend NZ$26,100.

Political parties in New Zealand can spend NZ$2,964,100, if they have candidates in all 71 electorates.

In United Kingdom, there are no limits on donations from UK-based "permissible donors." However, the non-resident British donors can donate up to £7,500 to a party.

It is imperative t note that in 2013, an international NGO "Commonwealth Human Rights Initiative" had issued a report that revealed that political parties in 40 countries including France, Italy, Germany and Japan were required by law to disclose their source of income, assets and liabilities among other records.

The NGO’s report had stated: "In countries like Sweden and Turkey political parties have a voluntary arrangement to open up their records to the people. Parties in some of these countries depend solely on state funding while in a majority of others their counterparts receive both public funding and private contributions. Countries like Austria, Bhutan, Brazil, Bulgaria, France, Ghana, Greece, Hungary, Italy, Kazakhstan, Kenya and Kyrgyzstan have a system by law for political parties to pro-actively disclose their financial information to people. Nepal, Poland, Romania, Slovenia, Suriname, Sweden, Tajikistan, Turkey, Ukraine and Uzbekistan also provide public disclosure on funding of political parties."

The "Commonwealth Human Rights Initiative" had held: "Countries like the US, UK, Belgium, Canada, Australia, New Zealand and South Africa, among others, have adopted different models of disclosure of details of political party and election campaign financing. However, in India the regulatory bodies are not obliged to pro-actively disclose any financial information that political parties submit to them. The political parties being in the public domain must be transparent about their functioning. The principle of transparency of political financing is increasingly gaining international recognition."

The report had said: "Political parties in Czech Republic, Denmark, Germany, Japan and Portugal provide access through parliament, ministries and other regulatory bodies to their sources of income, donations, assets and liabilities and expenditure. In Germany, the Basic Law (Constitution) and the Political Parties Act, 1967 require political parties to publicly account for the sources of their funding. The political parties receiving donations from natural and legal persons must submit a statement of accounts to the German Bundestag (Parliament) every year."

Current campaign finance law at the federal level in United States requires candidate committees, party committees, and Political Action Committees (PACs) to file periodic reports disclosing the money they raise and spend. Federal candidate committees must identify, for example, all PACs and party committees that give them contributions, and they must provide the names, occupations, employers and addresses of all individuals who give them more than $200 in an election cycle.

Transparency in funding of political parties and their spending limits is so important that even the most honest countries on Transparency International's Corruption Perceptions Index are finding it hard to tackle the menace of financial misconduct.

For example, New Zealand and Denmark rank highest with scores of 89 and 88 respectively on Transparency International's 2017 Corruption Perceptions Index, are haunted by financial scams faced in this context. In Denmark, adjudged the most honest country in the world by Transparency International's 2016 Corruption Perceptions Index, it was found that politicians do not have to publish private donations they receive.