Why did Ottawa originally introduce a political donation tax credit system? How did political parties fundraise before the new tax credit system was introduced? Were political representatives and parties more connected to their constituents? Click here to read the full article or an excerpt below.
The debate so far has focused on the lack of limits and disclosure around private donations. But lost in the shuffle has been a look at the costs to taxpayers of a political tax credit system that’s almost four decades old.
The program gives political donors a tax credit worth 75 per cent of their first $100 donation, 50 per cent up to $500 and 33.3 per cent for donations in excess of a $550 donation to a registered political party. The top end is a $500 tax credit, for which someone would have to donate $1,150.
“It’s really very generous,” said University of B.C. professor and tax expert Kevin Milligan. “A 75 per cent tax credit, you don’t get that for anything else, pretty much. For every $1 you give, (the party gets) $3 from the public chest. That’s a very generous tax credit.”
It’s far more lucrative than the tax credits for donating to a charity, which would give you a combined federal and provincial tax credit of $20.06 for a $100 donation, compared to $75 credit for the same donation to a political candidate, party or constituency association.
If you don’t hear anyone complaining, that’s because the publicly funded political tax credit is an incentive that virtually all political parties have enjoyed and promoted for decades.
“Tomorrow at midnight is your last chance to get a tax credit before an election year,” read a Dec. 30 fundraising email by B.C. NDP president Craig Keating.
“They don’t carry over; you’ve got one shot — and if you don’t donate by midnight tomorrow they just disappear. Don’t let them go to waste! Get back $7.50 at tax time — but only if you chip in $10 today.”
Keating had little to say about the tax credits in an interview Monday, repeating that the NDP remains first focused on banning corporate and union donations.
The B.C. Greens want to keep the program. “It encourages citizens to participate directly in democracy and it’s an incentive for them to participate,” said deputy leader Sonia Furstenau.
The B.C. Liberals, who have resisted numerous calls to rein in the political donation system, also back the tax credit program.
“Tax credits, like those provided for charitable donations, are an incentive for British Columbians from all walks of life to support a cause they believe in,” said B.C. Liberal spokesperson Emile Scheffel.
“What we do not support is a system where parties would be primarily funded by public subsidies — with taxpayers footing the bill even for those parties they would never vote for.”
Most provinces have similar versions of B.C.’s political tax credit program. Ontario and Alberta have the same credit rates, for example, but with larger maximums of $1,330 and $1,000 respectively.
The federal government also has tax credits for donations to federal political parties, to a maximum credit of $650.
B.C.’s political donation tax credit system was introduced in 1979 under premier Bill Bennett, to mirror a program introduced by Ottawa. It has remained largely unchanged since then.
The tax political tax credit system was one of two notable changes made that year — the other was to lift a ban on polling in B.C., which had been illegal.