Party Funding in Southeast Asia and Germany

The funding of political parties is somewhat precarious and controversial all-over Southeast Asia and, unfortunately, opaque enough to enable corruption and money politics in too many places. The politicians are in a difficult position to eradicate that because election campaigns are getting increasingly costly and who would be prepared to cut himself off from the vital funding sources? In several countries the legislature and the judiciary have tried to eradicate political corruption, but as the saying goes, necessity is the mother of invention, and politicians are creative in this field.
For comparative reasons, let us look into the experience with the legislative and judicial attempts to make the political parties in Germany as clean and democratic as possible.

After the end of WWII and twelve years of Nazi rule, the allies, USA, GB, and France occupied their respective zones in the West of Germany and tried their luck on “Denazification” and “Re-education” for a democratic future. The USSR, occupying the East of the country, tried to nurture a Communist new Germany there. Based on democratic traditions before the Nazis took over in 1933 and with several politicians who had resisted the Hitler regime, the Federal Republic of (Western) Germany was established in May 1949. The men and women in the Parliamentarian Council who formulated the new constitution were careful in designing it in the most impeccable democratic form and the following legislation took great care to make the new parties as fair, free, and democratic. The constitution stipulated that the political parties should be regulated by a federal law. But because of different expectations on the funding part, the Political Party Act was passed only in 1967 and amended in 2002, meant to ensure the transparency and integrity of political parties.

The funding regulations
The basic principle of the funding is that the parties must generate at least half of their expenses by membership fees and donations before any topping up by tax money. And they must regularly and publicly declare their income and expenses and the respective sources. Public subsidies for the party finances depend on the number of votes won and are limited at .83 Euros per vote. The federal ceiling for party disbursements is fixed at 150 million Euros per year. Donations must be declared and one half of them is tax deductible for the donors. One of the aims of the Political Parties Act is to fight corruption. Therefore, donations to political parties are limited to 20,000 euros per year. This is to prevent interest groups from influencing politics by donating large sums of money. Members’ contributions are also part of the Political Parties Act. To strengthen the influence of members on party decision-making, minimum contributions must be levied. To ensure that the Political Parties Act is complied with, all financial flows to and from political parties must be disclosed. Everyone thus has access to information on donations or membership fees of the respective party. The Political Parties Act has had a positive impact on democracy in Germany. It ensures the transparency and integrity of political decision-making processes and at the same time prevents corruption through donations or membership fees. Unfortunately, the system was not airtight, and several funding scandals have occurred over the years, a major one even involving then chancellor Helmut Kohl.

Membership fees
Since membership contributions are nominal or close to zero in Southeast Asia, a glimpse into the German experience may be interesting. The following figures come from a recent article in one of the mainstream dailies which reminds the readers that, cleverly, the parties have pegged the membership fees to the net monthly income of their supporters. Membership normally does not come with a privilege expect in some cases when knowing the mayor of a village via the party may facilitate one or the other administrative procedure. Now, are the fixed fee levels different in the competing parties? Yes, they are. For a high monthly net income of 6.000 Euros, the fee you are supposed to contribute to the Social Democratic Party, the oldest in Germany and formerly a working-class party, is three hundred Euros. That sounds like a lot, but the income classification is voluntary, and one might guess how many members are paying that much. The other parties are much cheaper at the same income level. The Green Party asks for 60 Euros, the Free Democratic Party for 52, the Christian Democrats for 50, and the right-wing Alternative for Germany for 10 Euros. Pensioners, jobless members, or students can pay as little as 2,50 in the SPD and probably an equivalent in the other parties. But all are experiencing a shrinking membership base, especially the Social Democrats who also suffer from a higher and higher median age of their members.

Dr Wolfgang Sachsenröder                                                                           2 March 2023

PS: A part of this post has been redacted with AI support, my first attempt to AI. The software I have used is “neuroflash

For an overview on party financing in Southeast Asia, see my book below: