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A stack of $100 bills. (iStockphoto)
A stack of $100 bills. (iStockphoto)

Crunching Numbers

Per-vote subsidy but a fraction of taxpayer support for political parties Add to ...

As part of his next campaign platform, Stephen Harper will propose the per-vote subsidy given to each party every year be abolished. As the Conservatives have a better money-raising organization than that of their rivals, the removal of the subsidy will wreak havoc on the finances of the opposition parties and give the Tories a distinct advantage. But all parties, and especially the Conservatives, will still rely mostly on funding from the public trough.

The Prime Minister has stated that, though he sees some role for public financing for political parties, he sees no justification for the direct subsidy the allowance provides. It is a smart political game to play. Arguing against removing the allowance puts politicians in the difficult position of asking taxpayers to continue paying for their political operations.

For each vote cast in their favour in the last election, parties receive a little more than $2 per year. In 2009, that meant $10.4-million going into Conservative coffers, $7.2-million going to the Liberals, $5-million to the New Democrats, $2.7-million to the Bloc Québécois, and $1.9-million to the Greens. If public funding of political parties should be democratic, then this portioning out of funds fits the bill – for the most part. The tax dollars of non-voters are distributed without their consent, and those smaller parties who do not meet Elections Canada’s requirements for the allowance are left without any funding.

The allowance makes up a large chunk of every party’s finances, but not all of it. Including donations their various riding associations received, the Conservatives raised about $22.6-million in 2009, compared to about $12.5-million that the Liberals raised. The NDP was able to draw in about $5.1-million in donations, the Greens about $1.5-million and the Bloc about $1.4-million.

The Conservatives are in the best position financially because they do the best job raising money. In 2009 they had over 100,000 donors to their national headquarters, and in total raised about $4.33 per vote earned in the 2008 general election. This compares favourably to the Liberal average of $3.42 raised per vote and $2.01 for the NDP. The Bloc comes out on the bottom, raising about $0.99 per vote.

But a fine-tuned fundraising machine is not without its costs to the taxpayer. A donation of $400 or less to a political party or riding association results in a tax credit of $300, or 75 per cent, more than twice the credit given to donations to charitable organizations. According to the Department of Finance, the cost of the tax credit in 2009 was an estimated $20-million. Assuming the credit is doled out in a proportion similar to the share of money raised by each party, that equates to a cost of $10.5-million on donations given to the Conservative Party, $5.8-million on donations to the Liberals, $2.4-million on donations to the NDP, and $700,000 and $600,000 on donations to the Greens and Bloc Québécois, respectively.

In other words, whereas tax dollars are portioned out in a relatively democratic way to the five federal parties through the per-vote subsidy, Conservative donors are receiving over 50 per cent of the tax credits on donations, despite their party receiving less than 38 per cent of the vote in 2008. The Liberal and NDP portions are somewhat more in line with their public support, but the Greens, who earned 7 per cent of the vote in 2008, get less than 4 per cent of the tax credits for their donors. Bloc donors, whose party earned 10 per cent of the national vote, get only 3 per cent of all tax credits given out by the Canada Revenue Agency.

Perhaps the most lucrative of all public sources of funding for political parties is the election expenses reimbursement. The national organizations of the five parties had 50 per cent of their 2008 election expenses reimbursed, as they had all reached the watermark of 2 per cent support, or 5 per cent in the ridings in which they presented candidates.

But this funding is based entirely on the amount of money spent, rather than national support or even funds raised from the population. As the Conservatives and New Democrats spent the most in the 2008 election, they received the largest reimbursements in 2009: $9.7-million and $8.4-million respectively. The Liberals were reimbursed $7.3-million, the Bloc $2.4-million, and the Greens $1.1-million.

In addition to the reimbursement of expenses made by their national campaigns, the parties also receive reimbursements for 60 per cent of all expenses incurred by their candidates in the 308 ridings in the country. These funds are handed out to organizations in each riding, but only if they had received at least 10 per cent support in the election.

While this is not much of a problem for the Conservatives (who reached or surpassed the 10 per cent mark in 300 ridings), the Bloc Québécois (71 of 75 ridings in Quebec) or even the Liberals (271 ridings), it penalizes the smaller parties who do not have strong levels of support in all parts of the country. The New Democrats reached 10 per cent in 243 ridings, meaning the expenses incurred in the other 45 were not reimbursed. The situation was even worse for the Green Party, who reached or surpassed 10 per cent support in only 41 ridings. It is even more difficult for independents and candidates from fringe parties to get their expenses reimbursed.

Though the total reimbursements given to candidates has not been compiled or released by Elections Canada, my own estimates indicate the reimbursement for election expenses owed to Conservative candidates totals $11.7-million, compared to $7.8-million for the Liberals, $4.1-million for the New Democrats, and $2.4-million for the Bloc Québécois. The Greens will only receive about $610,000, or 2 per cent of all reimbursements given to the local campaigns. The Tories, by contrast, will receive 44 per cent of all reimbursements.

Combining the per-vote subsidy, the tax credits on donations, and the reimbursements for the 2008 national and local campaigns, the Conservatives would have received about $42.2-million from public sources in 2009, the last year for which complete financial data is available. The Liberals received $28.1-million, the New Democrats $19.8-million, the Bloc Québécois-$8.2 million, and the Greens $4.3-million.

With each party getting $2 per vote from taxpayers, it is a level playing field. But including all sources of public funding makes it far less equitable. In 2009, the Greens would have benefited from about $4.59 in public funding for every vote cast for them in the 2008 election. That amount is $5.91 for the Bloc, $7.75 for the Liberals, and $7.87 for the New Democrats. Because of their strong fundraising organization and the large amount of money spent in the 2008 election, as well as the per-vote subsidy, the Conservatives benefited most from public funding in 2009, at $8.11 per vote.

Éric Grenier writes about politics and polls at ThreeHundredEight.com

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