It is commonly thought that political parties in Canada are entirely self-funded through voluntary donations. After the per-vote subsidy was removed in 2011, taxpayers were off the hook, right? Wrong. A myriad of tax credits and refunds still exist that keep political parties dependant on public financing for the majority of their operations.
First, there’s the income tax credit for political contributions. As any political party member is reminded ad nauseam, this tax credit is incredibly generous. Giving $400 actually only costs the donor $100 thanks to the 75% tax credit on donations of $400 or less. Fear not, when you give $400 to your party of choice the federal government is there to cover $300 of your donation with other people’s money when it comes to tax time.
Although reduced for amounts over $400, it takes a donation of $1,350 before the donor even covers half the cost of their “generosity”. In 2015, the three main parties (Liberals, Conservatives, and the NDP) received about $69 million in contributions. According to the latest estimates from the Department of Finance, the government forked out about $55 million in political donation tax credits for the 2015 year (1). The bulk of this $55 million went to those donating to the main three parties. These tax credits are still an indirect subsidy since political parties receive significantly more than the real cost to the donor.
Next up are the refunds from Elections Canada in each of the 338 ridings for every registered candidate. Every candidate that receives 10% or more of the vote has 60% of their election expenses repaid. That means spending $80,000 nets back $48,000 in public money. To put this into perspective, in the 2015 general election candidates for the big three parties spent a combined total of about $70 million in elections expenses. When the campaign returns were filed these riding associations got back as much as $42 million in public funding.
If that isn’t enough, federal parties also spend money running national campaigns during each election. This is in addition to each of the 338 local election campaigns run by individual candidates. Here only 50% of election expenses are refunded by Elections Canada for parties that receive 2% of the national vote (or 5% of the vote in ridings they contested). In the 2015 federal election, the big three parties spent a combined total of about $115 million which nets them back as much as $57.5 million in public dollars.
In the 2015 election year alone, the big three parties collectively received about $99.5 million dollars in rebates from Elections Canada. In addition, they would have indirectly received the bulk of the $55 million in political donation tax rebates in the form of higher donations. So definitively, political parties are heavily dependant on public funds. The big three alone received somewhere in the neighbourhood of $150 million in public funds in the 2015 election year.
What public good is served by showering political parties with tax dollars? Partisans will say that this funding is needed to be competitive during elections. That response misses a fundamental point: if no political party depends on public funding, then they wouldn’t need it to be competitive. Without public funding, politicians would have to focus more on meeting voters in person or through social media and less on misrepresentative TV or radio attack ads. Elections would certainly look different without all this extra money, but maybe that’s a good thing.
Another argument for the status quo is that investment is required to maintain the health of our democracy. Would the health of our democracy suffer if we endured fewer misrepresentative television and radio ads? Would it suffer if election signs were almost everywhere you looked, instead of plastered wherever you happen to turn your head? Would it suffer if each elector were robocalled half as much? With communicating in the modern world being cheaper than ever, would democracy suffer if all political parties spent less money?
The answer to all of these questions is no. I’m certain most Canadians would agree. It’s time to end public funding for political parties, for real this time.