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Indirect State Funding of Political Parties: Party-State Relations and the Strength of Party Organisation in Western Democracies

Final Report Summary - ISFPP (Indirect State Funding of Political Parties: Party-State Relations and the Strength of Party Organisation in Western Democracies)

Project context

The project 'Indirect State Funding of Political Parties: Party-State Relations and the Strength of Party Organisation in Western Democracies' explored a particularly important yet widely neglected form of indirect state funding - party taxes. In many democracies, it is a wide-spread practice that party members holding public office regularly donate a fixed share of their salary to party coffers. Since the state pays these salaries, so-called party taxes are considered as a form of indirect state funding complementing (or even substituting) direct state support. Parties in Western democracies differ, first, in whether they collect taxes at all. The practice is unknown in the Canada, for instance, while German parties tax a wide range of office holders. Secondly, parties differ in how much they take of individual salaries; and thirdly, in whether they tax legislative and executive offices, thus political offices (e.g. Members of Parliament (MPs)) only or whether meritocratic posts (e.g. senior officials) are included. Earlier research did not account for these differences, either theoretically or empirically. This project took some initial steps to close these gaps.

Project objectives and results

The project developed a theoretical framework on the organisational and institutional conditions allowing party elites to extract taxes from their office-holders' salaries. The framework pointed to the particular relevance of party family (as a proxy for party organisational strength, i.e. the stronger the extra-parliamentary party, the more likely the collection of taxes), party ideology (i.e. the further left, the higher the tax), and parties' state access (i.e. the wider the informal access of parties to state institutions in a system - e.g. patronage - the more likely parties will also tax office-holders' salaries). The framework was confirmed by a series of papers using quantitative and qualitative methods.

Accordingly, in terms of data collection, the project approached this practice in two steps. In a first step, data was collected across 19 long-lived democracies covering 131 parties. It mapped out whether and if so how much of a share of their salaries national MPs in these parties pay into party coffers. In a second step, five Western democracies (UK, Austria, France, Germany and Ireland) were analysed in depth through detailed analysis of primary documents and interviews (58 in total) with party representatives and experts in the respective countries.

The quantitative dataset allowed for the statistical assessment of basic cross-national pattern across a wide range of contexts. In line with the theory, the analyses confirmed party family, party ideology and the relative penetration of state institutions by political parties as important explanatory variables. Of further significance were party size and levels of parliamentary pay. The qualitative stage allowed these findings to be substantiated by covering further the taxing of elected office holders at lower governmental levels (and the handling of the practice across levels) as well as meritocratic office holders (e.g. officials, members on state boards), capturing the informal reach of parties into state institutions.

Project impact

In terms of research impact, in particular the qualitative stage assessed the (conflicting or complementary) relationship of particular types of party-funding regimes and the taxing practices adopted by parties, in order to provide guidance for academics and practitioners involved in the reforms of party regulations and funding schemes.

One main finding relevant to policy-makers is that the different ways in which parties access state resources (e.g. state funding, party taxes) reinforce each other by further legitimising intense party access to the state. This contradicts a demand-driven approach to party funding assuming, for instance, that by providing generous state funding parties might see 'no need' to access resources informally.