Table Of Contentm'-
LAWLIBRARY
OFCONGRESS
CAMPAIGN FINANCING
OF NATIONAL ELECTIONS
IN FOREIGN COUNTRIES
Prepared by the Staff
ofthe Law Library
Ruth Levush, Coordinator
Law Library ofCongress
April 1991
LL91-8
Digitized by the Internet Arciiive
I 2009
in
bampaigntihancmOOIevu
CAMPAIGN FINAiNCING OF NATIONAL ELECTIONS
IN FOREIGN COUNTRIES
Prepared by the Staffof the Law Library
Ruth Levush, Coordinator
Law Library ofCongress
April 1991
LL91-8 •
Abstract: Campaign Financing of National Elections in Foreign Countries surveys the laws
regulating campaign financing in 19 countries, including direct and indirect funding by both
governments and private contributors and covers restrictions on contributions, limits on campaign
expenditures, regulationofbroadcastadvertising,andmethodsofenforcingrequirementsconcerning
accountability reporting for money spent.
Forfurtherinformation, call: Ruth Levush, 7-9847
CAMPAIGN FINANCING OF NATIONAL ELECTIONS IN FOREIGN COUNTRIES
CONTENTS
CAMPAIGN FINANCING: A COMPARATIVE STUDY
1
Ruth Levush
AUSTRALL\ 25
Robert L. Nay
CANADA
39
Stephen F. Clarke
GERMANY
51
Edith Palmer
GREAT BRITAIN 63
Kersi B. Shroff
GREECE 75
Theresa Papademetriou
INDIA 84
Krishan S. Nehra
ISRAEL 95
Ruth Levush
ITALY 110
Giovanni Salvo
JAPAN 116
Sung Yoon Cho
MALAYSIA 128
Mya Saw Shin
MEXICO 137
Rubens Medina
NETHERLANDS 145
Karel Wennink
SWEDEN
147
Fariborz Nozari
TAIWAN 152
ConstanceA. Johnson and Tao-tai Hsia
THAILAND 158
Phuong-Khanh Nguyen
TURKEY 164
Belma Bayar
APPENDIX
BULGARIA 170
Ivan Sipkov
POLAND 176
Bozena Samecka-Crouch
THE SOVIET UNION 187
ZigmasA. Butkus
EUROPEAN COMMUNITY
189
Karel Wennink
BIBLIOGRAPHY 192
Marie-Louise H. Bemal
CAMPAIGN FINANCING OF NATIONAL ELECTIONS IN FOREIGN COUNTRIES
A COMPARATIVE STUDY
I. Introduction
The availability of financial resources to political parties may have a tremendous impact
on the electoral process in democratic regimes; so powerful in fact, that in some cases, it may
influence what we consider as the democratic nature of the election itself.
If a ruling party holds a considerable bureaucratic advantage over the opposition parties
and benefits from superior access to material resources and funds, there is no doubt that the
principle ofequal political opportunity is compromised.' Similarly, if political success is achieved
primarily through monetary advantage, the principle may alsobe threatened. Moneyfrom political
donations can influence and even control the flow of information, which could be detrimental to
well informed voting. Herbert E. Alexander, in his article "Money and Politics: Rethinking a
Conceptual Framework"^ states that: "The distinguishing characteristics of money are that it is
transferable and convertible without necessarily revealing its original source. The convertibility
ofmoney is of particular advantage in politics...." Due to this and similar concerns, a number of
countries have instituted a system ofgovernment fundingofelectoral campaigns. Thejustification
for such funding may be that it should lead to more competition since itwill enable candidates or
parties that lack monetary resources to more equally compete in a national election. Equality of
electoral opportunity can only be achieved if the mechanism used for such governmental funding
includes some safeguards against misuse of power by the governing party or person.
The dangers inherent in public funding include the possibility of "institutionalization of
existing party systems, generally favoring central party organizations over local ones, freezing
relationships among major parties or dominant coalitions, or locking out new or emerging
movements while maintaining current parties in existence perhaps after their support has
diminished."^ Whether the governmental funding takes a direct or an indirect form (such as free
broadcasting time, tax incentives for political contributions, or other means), there should be
safeguards to insure the equitable distribution ofsuch funds.
In dealing with the issues involved with government funding legislation in the surveyed
countries, the following questions have been raised:
• Should new parties or candidates get financing?
' See country reports for Bulgaria and the Soviet Union.
^ Comparative PoliticalFinance in the 1980s, 9 (1989) .
^ K. Paltiel, " Public Financing Abroad, Contrasts and Effects", in Malbin M. Parties, Interest
Groups and Campaign Finance Laws 364-370 (1980).
LAWLIBRARYOFCONGRESS -2
• Should the taxpayer have to finance the campaigns of losing parties or
candidates, or do the losers themselves have to be responsible for the risk they
took?
• Should the taxpayer have to finance the campaign of a party he does not
support?
• What kind of accountability should be required ofthe recipients?
• Should there be mandatory auditing of these funds or do disclosure or certain
bookkeeping requirements and the general penal law of the country suffice to
maintain a clean financial campaign?
• Should there be a limitation on campaign expenditures?''
Each country has taken different approaches to these aspects of governmental funding.
All of the countries surveyed allow non-governmental funding, although some imposed
ceilings on the amount of contributions or expenditures permitted from such sources. Some
countries, fearing foreign intervention in their internal affairs, either prohibited or limited foreign
contributions.
The comparative analysis that follows is intended to explore the methods of regulating
campaign financingwhich are used in selected countries in theworld, theways they arecarried out
and the attitudes of different legislatures toward appropriate penalties for their violation. The
countries included are: Australia, Canada, Germany, Great Britain, Greece, India, Israel, Italy,
Japan, Malaysia, Mexico, the Netherlands, Sweden, Taiwan, Thailand, and Turkey. Reports on
campaign financing in past or present communist countries undergoing electoral reforms (Bulgaria,
Poland, and the Soviet Union) as well as a report on financing elections for the European
Community Parliament are appended. Although not included in the comparative analysis, it was
felt that the great interest generated by the new electoral reforms and the anticipation for 1992
new European orderwarranted their inclusion.
II. Government Funding
A. Direct Funding
Only about halfof the countries surveyed award direct funding to parties or to candidates
competing in the election. Thesecountries are: Australia, Canada, Germany, Greece, Israel, Italy,
Mexico, Sweden, Taiwan, and Turkey.^
* In the United States, limitations on contributions have been upheld by the Supreme Court,
but amounts expended by candidates and parties may not be limited without violating the first
amendment rights of the Constitution [Buckley v. Valeo, 424 U.S. 1 (1976)].
^ See Table No. 1 for details.
LAWLIBRARYOFCONGRESS-3
The laws ofthe countries that providesuch direct funding usually require a minimum share
of votes as a condition for the receipt of the funds. This minimum share, subject to other
conditions, varies as follows: 0.5 percent of the total vote in Germany, less than 1 percent in
Israel, 1.5 percent in Mexico, 2 percent in Italy, 2.5 to 4 percent in Sweden, 4 percent in Australia,
3 to 6 percent in Greece, 7 percent inTurkey, 15 percent in Canada and 75 percent ofthe needed
votes for election in Taiwan.
There are two basic systems for the distribution of direct governmental funds. The first
one, adopted by Canada and Australia, bases the funding on itemized accounts of qualified
expenditures. The second system, found in other countrieswhich provide direct funding, bases the
funding on a flat-rate formula, usually taking into consideration the percentage of valid votes
received in the election. However, the latter formula is not applied in certain cases. In Germany,
for instance, the amount ofgovernmental funding is limited to the total income ofthe party from
othersourcesover a four-year periodstarting from thesecond calendaryear followingthe granting
ofcompensation. The German rule, enacted in 1984, is based on the philosophy that the parties
should not be preponderantly funded by the government.*
B. Indirect Funding
Some form ofindirect funding exists in all the countries surveyed. Japan, which does not
allow direct funding, subsidizes more campaign-related activities than any other country in the
survey. Among such activities are: transportation during the election campaign, free mailing,
making of posters and establishment of ofOcial sign boards for displaying them, placement of
newspaper advertisements, free broadcasting, arrangement of public meeting places where
candidates can give speeches, publication ofelection bulletins that contain data on the candidates,
and tax benefits for political contributions.
1. Broadcasting
Mostcountries,eventhoselimitinggovernmentinvolvementincampaignfinancing,subsidize
the broadcasting of political advertisements.^ The free broadcasting policy seems to take into
consideration that broadcastingis the mostexpensivecomponent in political campaigns throughout
theworld. Even in the United States, where the law does not prescribe free broadcasting, it does
require stations to charge political candidates the lowest advertising rate charged for their best
commercial clients.* In countries where broadcasting time is free, the greatest problem has been
the allocation of time. Granting equal amounts of time to each party might encourage the
formation ofsplinter groups; on the other hand, the system where time is given in proportion to
* For specific information with regard to government direct funding,see table No. 2 following
this analysis.
^ See Table No. 3 for details.
" 47 U.S.C. § 315(b)&(c) 9 (1988).
LAWLIBRARYOFCONGRESS -4
the number ofseats won orvotes received at the previous general election favors the status quo.'
A certain compromise was reached in Israel where each party, including those which were not
represented in the previous parliament, is given ten minutes and each party already represented
in the outgoing parliament receives three additional minutes for each member in the parliamenL
Aspecial problem arises in mixed publicandprivatebroadcastingsystems,such asCanada's.
There the problem is resolved by allocating a fixed amount of prime time (six and a half hours)
on all networks and stations for all parties for a four-week period prior to the polling day. This
total is then divided among the registered parties by their agreement; and, if such an agreement
cannot be reached, the time allotments are allocated by the government-appointed Broadcasting
Arbitrator."
2. Other Indirect Subsidies
Only Australia, Israel, and Japan indirectly finance the transportation of voters or
candidates during theelection period. OnlyGreatBritain, Japan and Mexico indirectlyfinance the
postal charges ofelection publications. Japanese law further grants the right to a limited number
of free newspaper advertisements during the election period. Swedish law, on the other hand,
permanently subsidizes newspapers. This is done because the major Swedish daily newspapers are
each affiliated with a political party, and the subsidies to the newspapers are intended to promote
the supply of information which is so vital to a democracy.
3. Tax Benefits for Contributions
Another method ofindirect governmental financing adopted byseveral countries is through
special tax benefits to private contributors or to parties or candidates. By forfeiting the taxwhich
is due to the state, the government indirectly funds the parties or the candidates. The amount of
indirect funding equals the amount which would have been paid had no exemptions or credits
applied. Countries providing such tax benefits are: Canada, Germany, Japan, Mexico, the
Netherlands, Taiwan, Thailand, Turkey, and Great Britain (only on inheritance). In most ofthese
countries there is a ceiling on the amount that can be deducted; in the Netherlands private
donations are tax-deductible provided they comprise at least one percent but do not exceed ten
percent of a person's gross annual income. In the case of corporations, donations are tax
deductible only if they exceed 500 guilders but comprise not more than six percent of the total
profit. Germany's law limits the deductibility of both individual and corporate contributions to
DM
60,000 (40,000U.S. dollarsequivalent). InJapan, politicalcontributions madebyan individual
should exceed 10,000 yen (76 U.S. dollars equivalent) in one year in order to be deducted from
the person's total income for the taxable year. Canada awards benefits in the way of tax credits
' Paltiel, supra note 3, at 361.
'° Broadcasting ofpolitically related news may pose some delicate questions. In some cases,
freedom of information may be misused by way of creating the news events themselves for
additional publicity. A determination in these cases is a task for the courts, see country report on
Israel. For further information on paid and freepolitical broadcasts in various countries,see Table
No. 3.
