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Analysis of Bill C-24 re: Federal Political Donations
(March 2003)

Set out below is Democracy Watch's analysis of Bill C-24, which amends the Canada Elections Act and related laws, changing the federal political donations system:

1) Disclosure

Strengths:

Weaknesses:


2) Limits on Contributions

Strengths:

Weaknesses:


3) Corporate, Union and Organizational Donations

Strengths:

Weaknesses:


4) Limits on Expenses

Strengths:

Weaknesses:


5) Public Financing

Public financing is provided through three mechanisms:

i. Expense Reimbursement (s-s.435(1)): Currently, parties are reimbursed for 22.5% of their election expenses, while candidates are reimbursed for 50%. Bill C-24 increases the party reimbursement to the candidate level of 50%. According to W.T. Stanbury, this would have been an added expense to taxpayers of nearly $10 million in the 2000 election. The percentage of votes in a riding that a candidate must receive to qualify for the reimbursement would be lowered to 10% from 15% under the bill (s-s.469(a)).

ii. Tax Credit (s.73 of Bill C-24, s.127 of Income Tax Act) Bill C-24 increases the tax credit provisions. Donors will now receive 75% of the first $400 of their donation as a tax credit (up from $200). Each of the other tax credit brackets will be increased, so that the maximum tax credit would be $650 for a political donation of $1,275 or more.

iii. Annual Allowance (s.435.01):  Bill C-24 contains a new measure that will provide an annual subsidy of $1.50 per vote received by the party in the previous general election, as long as the party received either 2% of the votes cast nationally or 5% of votes in the ridings where they ran candidates.

General Analysis of Public Financing: While it is difficult to determine the value of the added subsidies, taken together it is safe to say the new measures will provide an increase of roughly $35 million a year in public subsidies to the parties. As a result, parties will be far better off financially under the new system than they currently are, even without corporate and high-end donations. As a result, there will be little incentive for the parties to broaden the base of their support.  The public subsidies should be decreased to require the parties to broaden their base individual donors.  At the same time, free radio and TV broadcast time for parties during elections should be increased, as this is one of parties' highest election expenses.

FOR MORE INFORMATION, CONTACT:
Aaron Freeman, Board member of Democracy Watch
Tel: (613) 241-5179
dwatch@web.net
Democracy Watch's Money in Politics Campaign