Legislation to reform how political parties and candidates are financed in Canada was introduced in the House of Commons on January 29, 2003. The political financing legislation is a key part of the ethics action plan announced by Prime Minister Chretien in May 2002. The Prime Minister has made it very clear that he considers this an important piece of legislation.
The political financing legislation is meant to improve fairness and transparency in the Canadian electoral system, and to avoid undue influence or the perception of undue influence on politicians.
Core to the legislation is the banning of political donations from corporations and unions, and an increase in the public funding of political expenses to offset the loss in revenue.
Here are the main elements of the political financing legislation. Some compromises on the details are expected before the bill reaches a final vote in the House of Commons.
Ban political donations from corporations and unions
The political financing legislation would allow only individual Canadian citizens and permanent residents to make financial donations to registered political parties, candidates, constituency associations, and leadership and nomination candidates.
Corporations, trade unions and associations would not be allowed to make contributions to a registered political party or to a leadership candidate. They could still contribute a small amount of up to $1000 total to party candidates, nomination contestants or constituency associations.
Limit the size of political donations from individuals
Contributions from individuals would have an annual limit of $10,000 for each party.
Registration of constituency associations
Constituency associations, called electoral district associations in the legislation, would be required to register with Elections Canada and report annually. Only registered electoral district associations would be able to accept contributions, provide goods and services or transfer funds to a candidate or party, Each electoral district association would have an auditor and a financial agent.
Regulation of nomination and leadership campaigns
Spending limits currently apply to candidates and political parties during election campaigns. The political financing legislation would add spending limits to candidates for party riding nominations too. Imposing spending and contribution limits at the nomination level of the electoral process might make it easier for members of disadvantaged groups, like women, to run for office.
The political financing legislation also introduces some controls on party leadership races, which often raise and spend large amounts of money, much of which is financed by income tax receipts. The bill does not impose spending limits, but political parties must notify Elections Canada of a leadership campaign, and party leadership candidates would be required to register with Elections Canada and report on amounts and sources of contributions
Increase in public financing of the political system
To make up for the shortfall in funding that would be caused by the ban on political donations from corporations and unions, the political financing legislation raises the reimbursement rate for the election expenses of registered political parties from 22.5 percent to 50 percent. The legislation also lowers the percentage of votes that a candidate must get in his riding to be eligible for reimbursement of election expenses to 10 percent from 15 percent.
The political financing legislation would give an annual allowance to registered political parties of $1.50 for every vote they received in the previous general election.
The political financing legislation would also amend the Income Tax Act to increase tax credits for political donations by individuals.
