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Italy: Draft Legislation to Eliminate Public Financing for Political Parties

(June 7, 2013) On May 31, 2013, the Italian Council of Ministers approved draft legislation to eliminate public financing for political parties and to regulate the voluntary contributions made to them. (Press Release, Council of Ministers, Communication No. 6, GOVERNO ITALIANO (May 31, 2013).) The new rules are designed to foster internal democracy, transparency, and expenditure control in political parties. (Id.)

The draft substitutes for the current public finance system a new system based on private, voluntary contributions that offer financial benefits to the contributors. Access to the new finance system would be open to political parties that in the last election had at least one representative elected to the Chamber of Deputies or the Senate of the Republic or to a regional assembly, or that in the same election presented candidates in at least three electoral districts for election to the Chamber of Deputies, the Senate, or the regional assemblies, or at least in one electoral district for election of Members of the European Parliament belonging to Italy. (Id.)

Background on the existing system

Under Law 195 of 1974 (Legge 2 maggio 1974, n. 195, NORMATTIVA), a system of public financing of political parties was introduced. Although in 1997 Italy introduced voluntary, private contributions, they were eliminated two years later when the fully public campaign finance system was re-introduced by Law 157 of 1999 (Legge 3 giugno 1999, n. 157, NORMATTIVA.). That Law also created five government funds: four concerning elections for the Chamber of Deputies, the Senate, the European Parliament, and the regional governments and a fifth to finance popular referenda. (Id.) Law 156 of 2002 contained provisions related to electoral reimbursements (Legge 26 luglio 2002, n. 156, NORMATTIVA), and Law 51 of 2006 contained a meaningful increase in public finance for political movements and parties. (Legge 23 febbraio 2006, n. 51, NORMATTIVA.)

Proposed new system

Under the provisions of the draft legislation, contributions to private political finance funds could take one of two forms: a tax deduction or a “2×1000” contribution. Under the tax deduction modality, cash donations made by individuals to political parties would be deductible from the gross amount of their individual taxable income according to a scale established in the draft legislation, up to a maximum of 52% of donations of between €50 and €5,000 in value per year. (Communication No. 6, supra.)

Under the “2×1000” alternative, a taxpayer could earmark two percent per thousand of his or her taxable income as a contribution to an eligible political party. Even though the “2×1000” fund is composed of private contributions, it constitutes a public fund managed by the government. Implementing regulations would establish the mechanism for the proportional allocation of the funds to political parties, based on the taxpayers’ designated contributions to each. (Id.)

The plan for voluntary private finance funds would enter into effect in 2014, but would be fully operational only in 2016. When citizens submit their income tax returns for 2014 in June 2015,they would have the option of allocating two percent per thousand of his or her taxable income to the political party of their choice. (Id.)

After all tax returns are submitted in June 2015, the Treasury would be allowed another month to establish the exact amount of the “2×1000” fund to bedistributed to eligible political parties. From the date when the bill enters into force until the Treasury makes its determination in July 2015, increased cuts in public financing of political parties will apply (40% during the first fiscal year after the law enters into effect; 50% in the second FY; and 60% in the third) until the complete cessation of that funding in the fourth fiscal year following the entry into force of the law. (Id.)

The draft also contemplates transparency criteria on the basis of which political parties may receive private, voluntary contributions. In particular, a party must be organized according to minimum requirements that ensure internal democracy. It must also ensure transparency in the access to all information related to its functioning and maintain a complete website with information, written in clear language and easy to consult. The website must publish the political party’s budget, cash flow statements, balance sheets, financial reports, and minutes indicating the approval of such documents by an independent audit firm. (Id.)

In addition, the bill includes new provisions concerning political communications outside electoral campaigns: political parties will have the right to access television time, free of charge, for the transmission of their messages (for a maximum of one minute), in order to present their political views to the citizens. (Id.)