Subsidising political parties

(By Emejuiwe Victor)
With the recent de-registration of 28 political parties, INEC must have started the process of determining the number of eligible political parties necessary to compete favourably in elections. If at the end of the day only five political parties are available, I believe they should be well funded so that no one party has an overriding financial influence over the other. In order to achieve this, the only way out is for INEC to place a capital base for each political party.

THE issue of government funding for political parties has become a major debate in the country. While some advocate the continuous support for parties, others say that government should withdraw any such support. Recently, the Congress for Progressive Change (CPC) lent its voice against government funding. Its national secretary asked the Independent National Electoral Commission (INEC) to stop funding political parties.  He believes that it is necessary for parties to be self-sustaining. This, he argues, would encourage discipline in the parties and ensure that only viable ones are kept afloat.

It has been observed that most of the parties have turned the subsidy into a big business. Such parties are regarded as mere briefcase parties. The recent controversy over INEC’s decision to de-register about 28 parties might not have been unconnected with the downsizing of parties instead of throwing money at unviable organisations.

It is worrisome that during elections, the focus of the Nigerian electorate is directed at just political parties that conduct active campaigns. Campaigns and rallies during elections are effective means of selling candidates and party manifestoes. This produces a healthy contest and engenders wide participation of the masses. It also generates an election in which programmes being canvassed are competitive. Naturally, the choice of the electorate varies because of their assessment of the candidates and their parties. Campaigns and publicity are thus vital activities that political parties must engage in to relevant.

Subsidising political parties in Nigeria simply means the financial support government gives to each of them. The sentiment behind this is debatable. I would approach the issue by citing examples from countries such as Canada, the Netherlands and the United States (U.S.). In Canada, there are three funding processes for political parties: the first is the quarterly subsidy, which is paid to the parties according the total number of votes they were able to record during an election.

The other method is through tax credits. Political contributions are publicly subsidised via personal income tax credit. This credit is given to the individual based on the value of his contribution to the party. For instance, a credit of 75 per cent of the first $400 contributed to a party is given to an individual. For the political parties, the maximum political contribution that can be given to the national organisation of each party is $1,100. For this amount, the party receives a tax credit of $591.67, representing a subsidy of 53.79 per cent.

The last method employed by Canada is reimbursement of expenses made after the election. Over 50 per cent of the total sum spent by a political party is reimbursed to it. In this case, the party is expected to record at least 2-5 per cent support from all electoral districts where it shall be reimbursed. This implies that the more a political party spends the more it is reimbursed. Candidates who are able to get at least 10 per cent of the votes from electoral districts are paid 60 per cent of all expenses incurred.

Though this system of funding in Canada comes with its own major challenge, as individuals contribute more than the limit of $1,100 while political parties are only required to report the identity of individuals who may have contributed from $200 and above. Receipts are issued for donations of $200 or less. The parties flout this rule by receiving contributions from an individual in tranches of $200 to each of the party’s 308 electoral districts without disclosing their identities. Also, companies disguise as individuals and make donations in like manner.

In the Netherlands, the major source of party funding is membership fees. This heavy reliance on individual members is the pillar of Dutch society and politics. Unlike Canada, the Dutch avoids contribution from the business communities or subsidies from state interventions. They believe that because one lives within one’s own circle, citizens support their organisation.

There is no limit to the contribution an individual can make in the Netherlands. However, the challenge with this type of funding is felt when membership of a party is low or it shrinks. The Dutch Government, nevertheless, established a public institution to offer state subsidy to political parties for research. The Dutch spends money only on its party apparatus other than on campaigns because they enjoy free publicity from the media houses.

In the U.S., the money for campaigns for federal offices comes from four broad sources: (1) Small individual contributors (individuals who contributes $200 or less), (2) Big individual contributors (individuals who contribute over $200), (3) Political action committees, and (4) Self-financing (the candidate’s own money). Federal Law restricts how much individuals and organisations may contribute to political campaigns, political parties and other FEC-regulated organisations.

Corporations and unions are barred from donating money directly to candidates or national party committees. To each candidate, individuals may give $2,500, to national party committee, $30,800, to state district and local party committee, $10,000, to any other political committee $5,000.

The national party committee may give $5,000 to each candidate, there is no limit of contribution to the amount it holds for itself. There is also no limit of contribution to the state district and local party.

There is $5,000 limit to any other political committee. This same financial leverage applies to the state district and local party committee. Political action committee and multi-candidate may give $5000, $15,000, $5,000 and $5,000 to candidates, national party committee, state district and local party respectively; it has no limit to the donations made to any other political committee (itself).

The U.S. Federal Law prohibits corporations and labour unions from making direct donations and contributions to federal elections. These organisations may, however, sponsor what is called “separate segregated funds” (SSF) known as PAC. These organisations may receive or raise money from a restricted class, which consists of managers and shareholders, in the case of a corporation, and members in the case of a union or other interest groups.

The sponsor of PAC may absorb all the administrative costs of operating the PAC and soliciting contributions. The U.S. also has a presidential public financing system whereby a presidential fund is created for individuals to willingly direct a $3 tax to such fund; this is known as $3 tax check-off on individual returns.

In Nigeria, the Electoral Act 2010 provides that political parties obtain funds from (1) membership fee, (2) income generated from property owned by political party, (3) profit from the income of the enterprises owned by political parties, (4) public funding i.e. grant from the state, and (5) contributions from legal entities and natural person. The Electoral Act 2010 states in section 91 (9): An individual or other entity shall not donate more than 1,000,000.00 to any candidate.

However, while regulating on the disclosure of political parties, the Act provides in section 93 (2), “A political party shall keep an account and asset book into which shall be recorded all monetary and other forms of contributions received by the party” and “The name and address of any person or entity that contributes any money or assets which exceed N1,000,000.00.

From the above, it appears as if the Act gives a go-ahead for people to donate more than N1million, though it gives a punitive sanction in section 91 (11): “An individual who knowingly acts in contravention of sub-section (9) shall, on conviction, be liable to a maximum fine of N500, 000.00 or imprisonment for a term of nine months or both. From this section, the above highlighted word, “knowingly,” is enough to make individuals or entity violate the crime unknowingly.

Though no strong litigation has been brought forward on the violation of financial contributions to candidates and party, we have witnessed where individuals in this country donate to candidates and political parties above N1million. Such people unknowingly violate this section by contributing above the limit on behalf of themselves, their families and so on.

At the 2011 presidential election, a senator donated a total of N250 million on behalf of himself and 249 members of his family. However, INEC did not determine if those family members existed and even if they did, what they incurred as tax liabilities or status prior to that donation. Corporate firms are not also to exceed this limit; but it was witnessed in the last gubernatorial election in Edo State that the chairman of a company donated N1 million for each of the seven subsidiary names of his company.

However, from the case study of political funding conducted from Canada, the Netherlands and U.S., there seems to be a common challenge of tracking donations to political parties and candidates, which is the same with Nigeria. The question to be asked is, what role should government play in funding political parties – should it keep paying grants to all registered political parties? Should it, like in the Netherlands, give concession on media privilege to all parties for publicity? Should it encourage citizens to pay taxes to political parties just like the U.S?

These questions are pointers to the fact that political parties need funds to compete favourably during elections. While this is the case, party funding for campaigns must be regulated. INEC provides expenditure ceiling of N1billion for presidential, N200 million for gubernatorial, N40 million for senatorial, N20 million for House of Representatives, N10 million for State Assembly, N10 million for chairmanship and N1 million for councillorship.

However, INEC must first determine the reality of this limit. From the campaign finance monitoring done by the non-governmental Centre for Social Justice on the 2011 presidential election, it was observed that the N1billion expenditure ceiling was too low and unrealistic for a presidential election. The expenses of candidates should involve staging campaigns and rallies in all the states of the federation, electronic media coverage, print media coverage, campaign offices, souvenirs, billboards and posters, mobility. A party must be well funded to meet up these obligations.

With the recent de-registration of 28 political parties, INEC must have started the process of determining the number of eligible political parties necessary to compete favourably in elections. If at the end of the day only five political parties are available, I believe they should be well funded so that no one party has an overriding financial influence over the other. In order to achieve this, the only way out is for INEC to place a capital base for each political party.

Also, government may decide to subsidise these political parties after the election, just as it obtains in Canada. The percentage of votes a party is able to pull in each electoral unit should form the bases of subsidy to be received, in relation to the amount also spent. Other funding sources for political parties should be open for debate.

Emejuiwe Victor.

“Opinion pieces of this sort published on RISE Networks are those of the original authors and do not in anyway represent the thoughts, beliefs and ideas of RISE Networks.”

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