Taxpayers’ Money Will Continue To Fund Political Parties

Commentary, Taxation, Ben Eisen

As expected, the new Conservative majority recently announced that they would make good on their election promise to eliminate the per-vote party subsidy that awards political parties two dollars of public money every year for each vote they received in the last federal election. Contrary to popular belief, however, the elimination of the per-vote subsidy does not mark the end of taxpayer financed support for political parties. In fact government handouts will still be the primary source of funds for all five political parties represented in Parliament.

One of the most effective debating points employed by those who led the charge to kill the per-vote subsidy was that it is fundamentally unfair to force taxpayers to provide hard-earned tax dollars to finance political parties with whom they have profound ideological disagreements. This sentiment was expressed in an editorial in today’s National Post commending the government on its decision to kill the subsidy, which stated “Gone will be the days when taxpayers, bizarrely, were forced to fund the Bloc Quebecois whose sole mission is to break the country apart.” On this point, the editors of the National Post are incorrect.

The editors are mistaken because the per-vote subsidy was  one of a few different large subsidies that ensure the flow of taxpayer money into the coffers of political parties. For example, political contributions from individuals to political parties are heavily subsidized through tax credits that are far more generous than the tax credits given out for contributions to private charities. For the first $400 that an individual donates to a political party, a tax credit is issued for 75% of that amount. This means that when an individual donates $400 in a year to a political party, he winds up out of pocket only $100, because he gets $300 back through a tax credit. The other $300 comes out of the treasury, with the bill ultimately footed by the taxpayer. The tax credit for donations to political parties is much more generous than the credit given for private donations.

Of all the money that flowed to political parties from political contributions in 2009, only about a third actually came out of the pockets of the donors themselves. The remaining two thirds came out of the “pocket” of the federal government.

The Post may be right to commend the Tories on eliminating the per-vote subsidy, but the editors are wrong in stating that once the per-vote subsidy is abolished taxpayers will no longer be forced to fund the activities of political parties that they don’t like.