Tuesday, May 17, 2011

Killing the Subsidy

Shortly after the 2008 election, Stephen Harper caught everyone off guard with his plan to kill the per-vote subsidy political parties get. The backlash was intense, and this was seen as part of Stephen Harper's Machiavellian plan to kill the Liberals.

After this election, no one will be surprised when Harper decides to kill the subsidy. And, as a Liberal, I'm not nearly as worried about this move as I was two years ago.

Via Pundits Guide, here are the fundraising numbers for each party in 2010:

CPC: 17.4 million
LPC: 6.6 million
NDP: 4.4 million
Greens: 1.3 million
Bloc: 0.6 million

Looking at these figures, it's fairly obvious why the Conservatives are planning to kill the subsidy. This is obviously a partisan cheap shot, but voters have given Harper his majority, so partisan cheap shots are to be expected, and there's little that can be done to oppose them.

However, at the same time, here's what parties would have netted each year on the subsidy (based on the election vote totals):

CPC: 10.2 million
NDP: 7.9 million
LPC: 4.9 million
Bloc: 1.6 million
Green: 1.0 million

It's hard to project fundraising dollars moving forward. I'd expect the NDP should get a boost, and I'd expect demoralized Liberal and Bloc supporters to donate less money. But, let's assume for a moment that the parties continue to raise funds at their current levels. Here's how their annual revenue streams would break down:


Killing the subsidy, would drop Conservative Party revenue by 37%, Liberal revenue by 43%, Green revenue by 43%, NDP revenue by 64%, and Bloc revenue by 73%.

Like I said, the actual impact will depend on how well the different parties adapt. The Bloc can tap into the PQ fundraising apparatus, and the NDP will find they have many new friends they didn't have before.

However, if the Liberal Party can keep its membership engaged and effectively fundraise, the end of the subsidy might actually help them in their quest to wrestle back second place from the NDP.

39 Comments:

  • Did it ever occur to anybody that some Canadians, even non-Conservatives, want their tax money going to federal programs, and not to the political parties?

    And not only do we have to pay the parties for our own vote, but also for the votes of those who don't pay taxes.

    I know there are much bigger fish to fry, and I know it was done largely for partisan purposes, but it's still a welcome cut.

    By Blogger Robert Vollman, at 10:40 AM  

  • Hi Robert,

    I would also like to point out that if we cut the 75% tax break in contributions, it would save us millions per year. $1100 donation per year has a tax break of $591 dollars to the person that gave the money. $2 per vote is much small than the $591 don't you think?

    By Anonymous Patrick, at 10:47 AM  

  • Robert, how many voters don't pay taxes? Really, outside of some kind of egregious example of voter fraud where "dead" people vote, everyone in this country pays taxes. They may not be direct, ie income, taxes but they are taxes. Someone in this country cannot function without paying taxes. They might escape income taxes; they might get all of the GST back in a rebate; they might not drink, smoke, or gamble, avoiding the various sin taxes; but if they pay for just about anything then some of that is going to corporate taxes.

    Beyond that, Patrick is right. How is a few dollars, predicated upon someone actually voting for the party, in any way a worse subsidy to the tax rebates from political donations? Why should, as per my previous point, literally every citizen of this country be forced to pay higher taxes because some people want to donate money to a political party? We are essentially in a position where two Canadians, call them citizen A and citizen B, can have the exact same income but citizen A is contributing substantially more to the the country's collective good than citizen B because the latter donates money. Now if we suppose that financially healthy political parties are part of Canada's "collective good", which we must if tax rebates more generous than those for charities are to make sense, then how is having supporters with money to throw around a more legitimate means of determining the public financing than having supporters who vote?

    If we are going to abolish public financing of political parties then I think the tax rebates should be the first to go.

    By Anonymous Robin, at 11:26 AM  

  • Didn't I just say this?
    I know there are much bigger fish to fry

    Is your argument that since there are worse taxpayer subsidies of the political parties, that we should keep this one?

    And Robin, you're splitting hairs. For a lot of Canadians, 95% of the subsidy from their vote comes from other taxpayers, not them. Can't deny that, and that's inherently unfair.

    By Blogger Robert Vollman, at 12:11 PM  

  • Robin, I could ask the same question about any form of tax credit - not just political ones. I don't see why I shouldn't get a tax credit for donating to a political party when others get them for donating to organized religion. Unless there's going to be a fundamental change to all forms of tax credits for donations I can't see justifying the removal of tax credits for political donations.

    By Blogger Denny, at 12:15 PM  

  • Robert: "For a lot of Canadians, 95% of the subsidy from their vote comes from other taxpayers, not them. "

    Really? Where do you get this idea? Do you have any evidence to back this up? What constitutes "a lot?"

    By Blogger Denny, at 12:17 PM  

  • Also consider that there is a lot of pressure within the Conservative Party to also increase the per person annual contribution amount to make up for the loss from taxpayer subsidies. Upping it to $2100 wouldn't be unreasonable.

    However, I'd suspect that this might not happen until Conservatives see their new majority gov't fundraising numbers.

    By Blogger hatrock, at 12:33 PM  

  • hatrock, there isn't pressure within the Conservative party to increase the annual contribution limit. The Liberals have a history of getting large donations from a small base of donors. The conservatives and the NDP have historically gone for more donations, with a smaller average size.

    Increasing the annual contribution limit would help the Liberals.

    By Blogger Michael Fox, at 1:00 PM  

  • I'm probably about as fiscally conservative as they come. However, I had no problem with the subsidy as it seemed to be a reasonable way to help ensure that special interests are not the ones controlling the parties' purse strings.

    And, yes, seeing the Bloc get the subsidy and knowing that it made up the vast majority of their funding was annoying. But, IMO, it's like free speech - you take the bad with the good in order to achieve an overall greater good.

    [BTW, Hedy Fry's cross burning remark made her sound like a loon - not sure how anyone could defend it.]

    By Anonymous Jim R, at 1:04 PM  

  • Excellent point by Denny at 12:15. I'd be all for killing the tax credit for political donations if the same applied to religious organizations. Why should my tax dollars be used to fund a church I don't support anymore than a political party I don't support?

    By Anonymous Anonymous, at 1:09 PM  

  • Michael: your data is a bit dated. There is not much difference in the average size of contribution between the three parties anymore. Over the last few years, the Conservatives have been relying on fewer and fewer donors (still way more than the other parties) giving more and more. I may be mistaken, but the Liberals have even had a smaller average donation size in some quarters than the Cons or NDP.

    By Blogger Ted Betts, at 1:10 PM  

  • The backlash from the other parties was intense. The response from average Canadians was overwhelmingly positive towards eliminating the subsidy, which hopefully now happens ASAP.

    By Anonymous Anonymous, at 1:12 PM  

  • The Conservatives are the most heavily subsidized party by far. When you add up the per vote subsidy plus the tax credit subsidy plus the election expenses reimbursement, very little of the millions and millions and millions they spend comes from the actual pockets of individual Conservative supporters.

    * Roughly 80% of Conservative funds comes from the taxpayer subsidies, compared to about 69% for Liberals.

    * The Conservatives cost taxpayers $8.11 per vote, Liberals $7.75 per vote.

    * Tories took in $54.4 million in 2009, only $10.5 million of that was from actual donors (after tax credits)

    * And here's the real killer: while only 36% of voting Canadians (and only 22% of eligible voters) supported the Conservatives in the last election, the CONSERVATIVE PARTY RECEIVED 44% OF ALL TAXPAYER SUBSIDIES. Total taxpayer subsidies was approximately $100 million. The Liberals received only 28% of all taxpayer subsidies, which is more in line with their 30% of the vote; the NDP got 20% of the subsidies; the Bloc got 8%.

    Even if you don't like the per vote subsidy, you must agree that the Conservatives are eating at the trough a lot more than any other party, once again proving the saying that "Conservatives seem to think Conservative principles don't apply to them".

    By Blogger Ted Betts, at 1:15 PM  

  • Michael Fox, don't kid yourself. The Conservatives have been in power for 5 years, and will continue to be for a bare minimum of 4 more. Don't you think they're making a lot of new influential friends over this time?

    I know the grass roots ex-Reform Party types would like to think the CPofC is still the party of the little guy against the Liberal's Bay Street establishment, but the situation today is quite different. Especially now with the Liberals reduced to a rump and looking to be in the wilderness for the next decade (or worse).

    Looking at things historically is just that... history.

    You can bet your coffee money that raising the minimum contribution level to ~$2000 will now help the Conservatives, and by quite a bit I would suspect.

    By Blogger Tof KW, at 1:18 PM  

  • I'll just make the three points I always make on these kinds of discussions:

    * The gross fundraising numbers are all very well, but you have to consider the net funds raised after the considerable costs that go into raising them.

    * The parties also raise money at the riding and candidate level. No treatment of party revenue sources without mentioning these two other sources is complete - especially in the case of the Bloc which organized its finances differently than the other parties.

    * The parties all have different cost structures. The Liberals have considerably more overhead than the NDP, and thus have needed more revenue to run their basic operation between elections.

    We can't assess a balance sheet by looking just at gross sales, although it's an interesting figure. I'm just reminding people to consider the cost of raising money, and the overhead as well.

    By Blogger The Pundits' Guide, at 1:22 PM  

  • "Why should my tax dollars be used to fund a church I don't support anymore than a political party I don't support?"

    Actually, your tax money isn't supporting any church. All this means is that the taxpayer who is donating gets to keep a bit more of his OWN money come tax time.

    By Anonymous Larry, at 1:22 PM  

  • Larry said...
    Actually, your tax money isn't supporting any church. All this means is that the taxpayer who is donating gets to keep a bit more of his OWN money come tax time.

    Yes, but that individual taxpayer is getting back a portion of what they willingly donated... at the expenses of the 33 million Canadian taxpayers who must make up that shortfall in revenue.

    Multiply this over everyone receiving this tax break on church donations and maybe you'll get the point here.

    By Blogger Tof KW, at 1:32 PM  

  • Larry - To a certain extent, it is. Let's look at the political example.

    Say I donate $400 to the Liberals. I get $300 back at tax time. That money comes from government revenue, just as any other tax rebate or spending program would.

    It would be like the government saying that bloggers don't have to pay any tax. Sure, I'm just keeping more of "MY" money at tax time, but ultimately, it's other taxpayers who have to pay.

    By Blogger calgarygrit, at 1:32 PM  

  • Larry: "Actually, your tax money isn't supporting any church. All this means is that the taxpayer who is donating gets to keep a bit more of his OWN money come tax time."

    So how is that any different then me getting to keep a little more of my "OWN" money after donating to a political party? Seems like a double standard to me.

    By Blogger Denny, at 1:32 PM  

  • Pundits Guide - All valid points, and the great unknown is how the new political landscape will affect things. I'll let you write up the more thorough analysis ;-)

    But as a rough figure, the Liberals fundraise more than the NDP and now get less on the subsidy, so it should comparatively hurt the NDP more than them.

    By Blogger calgarygrit, at 1:35 PM  

  • Larry: As the others have pointed out, the rest of taxpayers are forced to subsidize your choice of church. You pay the church 50%; all taxpayers pay the other 50%.

    Same with political parties only worse: you choose to donate $100 to the CPC and it only costs you $25, while it costs all taxpayers $75.

    Curious that the great self-declared defenders of the taxpayer and self-declared opponents of tax subsidies, the ones who benefit the most from this set-up, don't have anything to say or oppose about it.

    By Blogger Ted Betts, at 2:17 PM  

  • Pundits Guide has good points, to which I would add that the NDP will need and want to increase their overhead to build the kind of national fundraising apparatus as the Liberals and the CPC if they are to maintain their gains.

    The Liberals have also had a greater overhead from being the Liberal Party in government or opposition. There are great perks but also bigger expenses. The Liberals need to cut back and the NDP needs to spend now.

    By Blogger Ted Betts, at 2:19 PM  

  • I support elimination of the vote tax and the rebates. Elimination of the one without the other, I don't support, for the simple reason that it's obviously tactical and therefore obviously hypocritical.

    By Anonymous Anonymous, at 3:08 PM  

  • @Ted Betts
    1. Your numbers differ from these: http://www.mc79hockey.com/?p=3617
    2. I don't get it, doesn't it reflect WELL on the Conservatives that they want to get rid of a trough that (according to you) helps them the most?

    @Denny:
    Yes, I pulled 95% out of the air.

    Think about it logically, where does Canada get its tax revenue? Corporate taxes, income tax, capital gains tax, and consumption taxes, primarily.

    Half of Canadians don't pay income tax, even fewer make very much in the way of capital gains, and even if they somehow paid an equal share of consumption taxes, that's still a relatively small portion of all tax revenue.

    Any time a retired senior/student/unemployed/homemaker/etc votes, most of that subsidy is coming from someone else - someone with the type of full-time job and/or healthy investment portfolio that would result in paying far more in taxes.

    Isn't that inherently unfair?

    By Blogger Robert Vollman, at 3:23 PM  

  • Robert:

    Not sure what you meant that link to be going to, but it doesn't seem to have anything to do with taxes or subsidies.

    As for your second point, you must have misread my comment. The Conservatives are not proposing to do anything about the tax credit subsidy and that is the one they really benefit from more than the others.

    If this was really about the "trough" and "subsidies" and not merely about bankrupting the other parties, then I would agree with you.

    The reality is that Harper has no concern for the abuse and misuse of taxpayer money whatsoever. He has demonstrated that with the 10%ers, the use of taxpayer money for partisan ads, etc. He is 100% partisan and 0% principle. And this is actually a very good example that demonstrates just that.

    By Blogger Ted Betts, at 3:35 PM  

  • That is the correct link.
    http://www.mc79hockey.com/?p=3617

    Title: Political subsidies worth cutting extend beyond the vote subsidy
    Author: Tyler Dellow

    Like everyone, I believe that the other type of voter subsidy should be cut, too.

    However, unlike everyone, I don't believe that the failure to cut one doesn't mean we should keep the other.

    By Blogger Robert Vollman, at 3:45 PM  

  • Let's not forget that there are other sources of money for parties that are based on the size of the caucus. The NDP for example will get millions of dollars that go to the Office of the Leader of the Opposition as well as caucus services money that are pro-rated based on caucus size. the liberals will have all that funding sliced and diced.

    By Blogger DL, at 4:18 PM  

  • Sigh.

    First, let's understand that these rebates do NOT create a deficit situation for the Government accounts which must be made up with tax contributions from other taxpayers.

    These rebates are already included in the budgetary figures: if they did not exist, overall revenue targets could arguably be reduced ever so slightly but it's not actually as simple as that, and it's a pointless argument to make.

    Instead, the discussion needs to focus on the rebates from a policy aspect, and most Canadians (myself included) would suggest that as a matter of policy these rebates should be reduced and eliminated where possible.

    Then, to the comment "but if they pay for just about anything then some of that is going to corporate taxes". While again this is debatable, the best current research suggests that most corporate taxes are borne by the employees, not by the customers: that is, the most significant pressure from corporate tax goes to salary and employment benefit costs. Again, all the more reason to focus on the policy and not oversimplify the economics.

    By Anonymous Anonymous, at 6:33 PM  

  • First, let's understand that these rebates do NOT create a deficit situation for the Government accounts which must be made up with tax contributions from other taxpayers.

    These rebates are already included in the budgetary figures: if they did not exist, overall revenue targets could arguably be reduced ever so slightly but it's not actually as simple as that, and it's a pointless argument to make.


    The government is still spending money on the rebates.

    Whether they planned for it or not is irrelevant. Sure, I may have the salary and the planning ability to carry my $5000/month coke habit without going into debt, but as long as the habit is there that's $5000 I don't have for other things.

    I appreciate that the impact of removing the subsidies and rebates on overall revenue may be insignificant, but to my knowledge no one is suggesting otherwise.

    By Blogger saphorr, at 7:37 PM  

  • "Whether they planned for it or not is irrelevant. Sure, I may have the salary and the planning ability to carry my $5000/month coke habit without going into debt, but as long as the habit is there that's $5000 I don't have for other things."

    Sorry, but no. The analogy would be that if you didn't have the coke habit, your salary would be reduced equivalently so that you would still have no more money to spend on other things. You don't have less money because of the habit; the government doesn't have less money because of the rebates.

    By Anonymous Anonymous, at 9:48 AM  

  • ???

    The GP will be fine. The Bloc has its core supporters. Who's going to donate to the grits?

    Certainly not me.

    By Blogger JimTan, at 11:05 AM  

  • Doesn't anyone remember why the subsidy was introduced in the first place? It was to get the big lobbying money (corporate and labour) out of the system. Does anyone doubt that our system is fairer for having that money out? I don't. When the subsidy disappears, there will be plenty of pressure, some from the CPC caucus, to reopen the door to this sort of fundraising. Shall we wait for Harper to fill the Supreme Court with partisans before we should expect a case equivalent to Citizens United to be heard here?

    The fact that this particular piece of clear partisan hackery is so high on the Government's agenda answers the question that came up so often on election night: will a majority mean that Harper can stop abusing Canada's democratic institutions? Answer: apparently not.

    By Blogger Don, at 12:37 PM  

  • If the Libs' attitute is "of course he's going to be partisan with majority power, that's what we'd do, but at least it also screws the party with which we have the most in common" then their problems are only beginning.

    By Anonymous Anonymous, at 4:28 PM  

  • I have one question for all those who criticized the Liberals in their comments:

    Were you paid for those posts?

    By Anonymous Anonymous, at 10:37 PM  

  • "I have one question for all those who criticized the Liberals in their comments:

    Were you paid for those posts?"

    No! I wasn't paid. In fact, I invested in the Liberals and they failed me. And, the critters and the poor and the minorities.

    By Blogger JimTan, at 11:06 PM  

  • The "new" Liberal Party Platform should begin with "Respect Taxpayers". They should vote (with the CPC) to abolish the per vote subsidy and then bring in a private members bill to get rid of the poltical donation tax credit. That will put the other parties in a bind.

    By Anonymous Andrew, at 10:20 AM  

  • Andrew's proposal brings to mind the removal of one's olfactory orifice as a means of causing chagrin to one's visage.

    By Anonymous MGI, at 10:48 PM  

  • So MGI, how would you propose to start respecting the Taxpayer? How about the new Liberal Party (this is an opportunity, ya know) start getting off the taxpayer's teat and stand on its own two feet. The same old policies and positions won't work.

    By Anonymous Andrew, at 11:12 AM  

  • It can't have effect in fact, that is exactly what I suppose.

    By Anonymous escortsite.es, at 10:15 AM  

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