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February 2011

 File n°15 

The Financing of Political Life: Political Parties and Election Campaigns

 

 

 

 

 

 

    Key Points

    Beginning in 1988, lawmakers have passed many provisions concerning the financing of political life and election campaigns, which have all been aimed at providing greater openness in this area.

    Political parties receive state aid depending on their results in elections. This aid now represents their main source of financing. However, gifts from other legal entities are forbidden.

    Candidates at elections must respect a ceiling placed on expenditure which is set by law and may also receive public aid. In order to be eligible for such aid they must be able to justify all their expenditure and revenue in a campaign account which is managed by a representative appointed by them and presented by a chartered accountant.

See also files 14 and 16

 

    At election time, political parties and candidates have a substantial amount of expenses. Until 1988, no specific legal structure actually covered the financing of these expenses. This loophole encouraged certain abuses which have been curbed progressively by measures taken since that date.

    The current mechanism, which has been gradually fine-tuned, is based on several fundamental principles:

    - The legal recognition of a juridical status for political parties. The Constitution provides political parties with two objectives:

      - To contribute to the exercise of suffrage;

      - To promote equal access by men and women to elective offices.

      Parties which fulfil these objectives can take advantage of public financing;

    - Party and candidate resources must have a certain number of safeguards attached thus guaranteeing openness and avoiding secret financing and the financial pressures which might compromise their independence.

    Thus, since 1995, public authorities have decided to cut all financial links between companies and the actors in political life (the parties and candidates) and to definitively prohibit legal entities, whatever they may be, from taking part in the financing of political life.

    - Election expenditure has been capped both to avoid a continual rise in communication expenses as well as to ensure greater equality between candidates outside of their personal wealth;

    - To offset the lack of membership financing, which has always been modest in France, the State has set up a system of financial aid to parties and of reimbursement of campaign expenses, provided that the parties strictly follow the laws which govern such spending;

    - Non-respect of such laws can have a series of consequences for the perpetrators (legal penalties, financial penalties and especially electoral penalties concerning ineligibility for election for the candidates, which have the effect of temporarily forcing those who take the risk of electoral fraud to withdraw from political life);

    - The implementation of the rules concerning the financing of parties and election campaigns falls within the remit of an independent administrative authority, the National Committee on Campaign Accounts and Political Financing (CNCCFP), which is under the authority of the electoral judge (i.e. the Constitutional Council for presidential and general elections and the administrative judge for other elections);

    - The estate of M.P.s must be declared at the beginning and end of each term in order to be sure that they have not taken advantage of their office to gain undue wealth. This verification is carried out by a second independent body, the Committee for Financial Transparency in Political Life (CTVP).

    I. – THE FINANCES OF POLITICAL PARTIES

    1. – the expenditure of political parties

    Political parties have all sorts of expenses. These include:

    - Salaries for permanent members of staff ;

    - Rent of offices and premises ;

    - Material, secretarial and postage expenses;

    - Advertising and communication expenses;

    - Drafting, printing and distribution of various publications (newspapers, pamphlets, brochures etc.).

    In addition, parties spend large sums of money at election time, by financially supporting the candidates from within their ranks.

    2. – The resources of political parties

    In order to finance their expenses, political parties have two main sources: private financing, which is usually small and public aid from the State, which has become the most substantial amount.

    a) Private Financing

    Like any association, political parties may receive dues from their members. In practice, such membership contributions only represent a tiny fraction of the resources of the party (the membership fee received from local officials and M.P.s is generally higher but such practices vary from party to party).

    Parties may have other private income but only within the limits of legislation which is becoming stricter and stricter: resources coming from the economic activities of the party, bequests etc.

    This category also includes donations from natural persons, which are covered by the laws of 1995. Despite the existence of tax incentives, voluntary contributions from natural persons have remained quite small.

    Since 1995, legal entities, whatever they may be (often companies), are no longer allowed to make the slightest donation nor to offer the slightest benefit in kind to political parties.

    b) Public Financing

    Public financing was progressively covered by a series of laws which were enacted between 1988 and 2003.

    The provisions of these laws which introduced State financial aid to political parties and groupings, set up the process of their public financing, which today is predominant. Thus today, allocations set aside for political parties and groupings are included in the annual Finance Bill. They amount to around €75 million for 2009 (Initial Finance Law for 2009, programme 232-01 of the budget of the Interior Ministry) divided between more than 40 parties or groupings.

    These funds are divided between the political parties into two allocations:

    - The first allocation (50%) depends on their results at the first round of the previous general elections. This part of the public financing helps parties with candidates in at least 50 constituencies and who obtained at least 1% of the votes cast (this provision was added in 2003 and aimed at reducing the sharp increase in candidacies which had grown from 2,888 at the first round of the 1988 general elections to 8,444 in the 2002 campaign);

    - The second allocation (50%) goes to the parties represented in Parliament. Only those parties which have received funds through the first allocation are eligible for the second (this avoids the setting-up of false parties in Parliament with the sole aim of receiving public financing).

    c) Other Types of Public Aid to Political Parties

    The State also provides political parties, in subsidiary ways, with means which could be considered to have a financial equivalent and can thus be seen as indirect financing:

    - Political groupings which are represented by parliamentary groups at the National Assembly or the Senate, have a right, outside of election campaigns, to ‘air time’ which gives them the chance to express themselves on public radio and television channels;

    - The State grants political parties tax reductions (company tax at a reduced rate) on certain of their own revenues (the rent on their developed and non-developed buildings for example).

    II. – THE FINANCING OF ELECTION CAMPAIGNS

    The current measures in force are based on several principles:

    - Private financing takes the shape of donations coming from natural persons or from political parties (donations from parties have no limit while those from natural persons cannot exceed €4,600);

    - The most expensive campaign expenses are prohibited (television and radio advertising and, in the three months prior to the election, telephone and computer marketing, press advertising and poster campaigns);

    - Electoral expenditure is limited according to the number of inhabitants. Thus for a general election, this limit is €38,000 per candidate plus an allowance of €0.15 per inhabitant of the constituency. This ceiling which was set up in 1993 is updated every three years to take into account the rise in the cost of living: it was multiplied by a factor of 1.26 by decree n°2008-1300 of December 10, 2008;

    - Each candidate must appoint a ‘financial representative’ who may, according to the case, be a natural person or an association dealing with electoral financing set up in accordance with the Law of 1901 on associations.

      This representative is the only person/body authorized to collect funds which will be used to cover election expenses and to make payments to cover expenses (the candidates are thus prohibited from having any direct financial dealings).

      He must set up a campaign account which deals with all the revenues and expenditures linked to the election campaign. This account, which is passed by a certified account, will be submitted for inspection to the National Committee on Campaign Accounts and Political Financing (CNCCFP). The CNCCFP will either approve, revise or reject the campaign account which has been put before it.

      In the case of rejection, the CNCCFP refers the matter to the electoral judge who may, if an irregularity is established, announce the resignation of the elected candidate and the ineligibility for election of the guilty candidate for one year (thus disallowing him from standing at the subsequent election);

    - If the account is accepted, the State grants candidates with at least 5% of the ballots cast at the first round, a reimbursement which can reach 50% of the expenditure limit. In other words, this mechanism allows the candidate to have his campaign expenses covered 100% by the State if he manages not to spend more than 50% of the authorized limit.

    - On top of direct aid to candidates, the State also covers a variety of other expenses (printing of ballot papers, circulars, cost of postering in the spaces set aside for this). Those candidates who gain at least 5% of the votes cast are reimbursed on the basis of an official scale).

    III. – TRANSPARENCY REGARDING AN M.P.’S ESTATE

    The aim of the 1988 laws, as well as dealing with the financing of political parties and election campaigns, was to ensure transparency regarding an M.P.’s estate, so as to avoid him taking advantage of his elected office to gain undue wealth.

    Thus the obligation to make a ‘declaration of estate’ at the beginning and end of each term of office, was introduced. The checking of such ‘declarations of estate’ is carried out by the Committee for Financial Transparency in Political Life, which is made up of high-ranking judges.