Anonymous Donations as Party Funding.

The perception that individuals and organisations donate to political parties in order to influence policy and/or receive honors makes the public, rightly or wrongly, view politics and politicians as self serving and corrupt.

In order to correct this, it has been suggested that parties should either be funded out of taxation or there should be a cap on the amount each donor can give.

I don’t think either of those two are satisfactory, and would like to suggest another alternative. Legislated anonymous donations.

Anyone wishing to donate above say £500, would have to send their cheque to the Electoral Commission nominating to whom it should go. Once a year, those donations would be passed on to the relevant party aggregated and without the names of the donors.

It should also be made an offense to let a party know, directly or indirectly you’ve made a donation, or colluded in this as a party official. The only possible reason you would want to make yourself known, would be to buy political influence.

Even if you did attempt to let yourself be known, there would be no proof you’d actually made that donation. It would be just your word. I therefore doubt any party officials would want to get involved, let alone pass on the message to politicians who actually influence policy and hand out the gongs.

Of course, there will always be those who seek to circumvent such rules. But that's isn't a legitimate argument, else we wouldn't have any rules or regulations. Making donations anonymous by law would draw a line, which people would then have to carefully weigh up the pros and cons before deciding stepping over.

Let's hope the Electoral Commission has a closer look at this...

From The Daily Mail:

A powerful new lobbying group containing dozens of the country’s super-rich – and backed by a Tory MP – has been set up to thwart moves to introduce a mansion tax.

The secretive outfit hopes to overturn public support for the proposed levy on multi-million-pound homes by arguing that it is ‘economically illiterate’ and would trigger a devastating crash in property prices…

Not many Poor Widows In Mansions were present, of course, but Boris Johnson has invented a new human shield:

"Labour and the Lib Dems would have you believe that the people they want to hit are oligarchs and international bankers.

"But the overwhelming majority of victims would be Britons who find themselves living in a house that has nudged over the threshold…

‘It is hard to think of a tax that is more viciously unfair. It hits families who have worked hard and traded up the property ladder only to find themselves walloped for their success."

Not many of those present either:

The new lobbying group, organised by a property mogul who operates in some of the capital’s most exclusive areas, was discreetly launched last November at a meeting in a West End restaurant attended by 65 of the richest people in the UK – including Russian oligarchs and multi-millionaires from the Middle East.

They were addressed by Tory MP Richard Harrington, who urged them to ‘donate to the Conservatives’ if they wanted to stop the levy.

Of course, as we well know from when UKIP got turned over by the Electoral Commission a few years ago (quite unreasonably and unfairly as it happens) political parties are only allowed to accept donations from people who are on the UK electoral register, which is British citizens and EU citizens resident in this country (plus a handful of Commonwealth citizens).*

So let's hope these kleptocrats donate generously and then El Comm claws all the money back again.

* The Lib Dems circumvented this by accepting donations from the UK front company of an overseas resident, who happened to be a convicted fraudster, but El Comm turned a blind eye for some strange reason.

As per usual, when it comes to talking about tax, they all show themselves up as total fucking idiots

From The Daily Mail:

George Osborne today called on the Labour party to pay £1.5million in tax allegedly avoided on a donation.(1) The Chancellor entered the row over shares given to Labour by businessman John Mill, who claimed it was a 'tax efficient' arrangement agreed with senior Labour Party officials.

Labour leader Ed Miliband also faced questions about the affair, insisting the party would pay tax on any dividends it received.(2)

Mr Mills revealed his £1.65million donation to Labour in January this year was made in the form of shares in his shopping channel company JML. He said the 'tax efficient' arrangement was agreed with senior Labour Party officials.(3)

Tax experts said he would have had to pay almost £1.5million in tax if he had made the donation in cash. They suggested Mr Mills would have had to earn £3.1million before tax to afford to make his donation in cash, with £1.46million going to HM Revenue & Customs.(4)

Alternatively, if he had made the donation via a single cash dividend it would have attracted dividend tax at 30.5 per cent, leaving a bill of almost £725,000.(5)

1) Nope.

The man wanted to donate shares in his own company, worth £1.65 million to Labour. He did not want to donate £1.65 in cash to Labour. Assuming that he qualifies for Entrepreneur's Relief (s169H TCGA 1992 onwards) on the shares, a straightforward disposal (gift or sale) would prima facie attract capital gains tax at ten per cent, so the maximum liability would be £165,000. Even if he doesn't so qualify, the capital gains tax would be a maximum of 28% on the gain (which will be slightly less than £1.65 million, as the shares must have a base cost).

I can only assume that he and the Labour Party signed a holdover election under s165 TCGA 1992, which means that the transferee is treated as not having made a capital gain at all.

The downside of this is that the transferee inherits Mr Mill's original low base cost. If and when the transferee (the Labour Party) sells the shares, then their capital gain (and the tax thereon) is correspondingly higher (probably at the mainstream corporation tax rate of 20% or 21%). NB, the relief cannot be claimed if the transferee is a company, s165(3) TCGA 1992.

So if Georgon Osbrown - who is the Chancellor of the Exchquer and has plenty of experts to advise him - had said that it was a bit underhand of Mr Mill and the Labour Party to sign the holdover election, and that he ought to cough up £165,000, well fair enough. But he didn't even bother asking, so he's clearly an idiot.

But rules is rules is rules and the capital gains holdover relief is, by and large, a good rule (it supposed to make it easier for business owners to pass on the business to the next generation, which seems fair enough to me). If Osbrown decides to amend the rules so that e.g. gifts to non-individuals are excluded from the relief, again, fair enough.

2) Nope.

The Labour Party is - for tax purposes - an unincorporated association, which are taxed as if they are companies (s1121 CTA 2010). In other words, dividends it receives from another UK company (or, since 1 July 2009, any legit company, s931B CTA 2009) are simply not taxed on the recipient. Admittedly, dividends are paid out of post-corporation tax income, so they are not strictly speaking "tax free" income, but the Labour Party will certainly not be paying tax on the dividends.

So it was a shit riposte and is clearly untrue. He didn't bother checking either.

3) Fair play. The man owns shares in his own company and can do with them what he likes. If he wants to give some to the Labour Party, that's his call. I see no moral or legal argument to say that he should enter into other transactions, such as paying himself a dividend or a salary bonus first and giving the net amount after tax to the Labour Party.

4) True but completely irrelevant, see (3). And the calculation is wrong anyway. If Mr Mills wants £1.65 million as a net cash bonus, the total gross bonus would have to be £3.1 million, his income tax/NIC bill would be £1.46 million and there would be another £430,000 Employer's NIC on top.

5) Also true, but completely irrelevant, see (3).
-------------------------------
Unlike most people, I am not just a "tax expert" but was also Treasurer of a large UK party (UKIP, as it happens) for a couple of years. What my advice boiled down to in such situations is that it is as a rule cheaper for a company to make donations than for the shareholders to make donations.

In the instant case, the shares themselves are of little importance to Labour - what they want is the dividends. So my original advice still stands - instead of a shareholder giving Labour the shares (which raises all sorts of issues, see above) and then paying them dividends out of post-tax profits, the shareholder could have just organised it that the company makes donations to Labour out of post-tax profits and a) nobody would bat an eyelid and b) the shareholder still controls the shares, if he falls out with the party, he just stops the company from making the donations, end of.

"Actually, I think even Miriam has a sneaky regard for them....

... whereas I of course despise the place, absolutely... we Lib Dems prefer "traditional" sources of funding and not from City Spivs. Not of course that they are all spivs... some are thoroughly decent upstanding donors, I mean people."

Electoral Commission report of August 2012:

The Liberal Democrats' largest donation was £250,000 from Brompton Capital Limited, a property development company owned by entrepreneur Rumi Verjee, who last year dined with party leader Nick Clegg at his grace and favour residence Chevening, in Kent. The largest individual donor was Lib Dem peer Lord Loomba, who gave £100,000.

The Guardian, February 2013:

Nick Clegg: Labour and Tories 'bewitched by Square Mile'

But actually despite what you might read into that headline (completely unintentionally of course, the G doesn't do misleading headlines after all!), he isn't launching an attack on the place or its morals, no not at all.

Emailed in by Bob E.

Two cheers for Nick Griffin

From The Huffington Post:

The BNP leader also alleged the "United States" had offered him money "to concentrate only on Islam, they wanted us to drop our criticism of the banking system. I refused, in 2007, and all hell broke loose."

This seems perfectly plausible to me, the financial services sector is far and away the largest donor to political parties in the UK (Tories and UKIP being the main beneficiaries).

Labour still gets a lot of money from trade unions (it's mainly ex-Prime Ministers who get lots of money from banks), which is fair enough, seeing as originally The Labour Party was the political wing of the trade union movement. Where this has gone horribly wrong is the fact that trade unions nowadays are mainly for public sector workers.

Nick goes a bit off-piste here though:

Griffin used his speech to plea for other far-right splinter groups to rejoin the BNP as well as espousing his theories about the English Defence League, calling the group "a serious, systematic, hugely-funded effort by the Zionist, neo-con clique, to dominate nationalism, to use as a tool to encourage the white working class to go and fight their wars, and so when the banking collapse comes, people will be looking for blame in the wrong direction."

It's quite true that the "neo-con clique" do spend a lot of money on this sort of thing, but I'd be surprised if the EDL receives a penny of it.

Even though this was in The Daily Mirror, it does have the ring of truth...

Via Drewster at HPC, from The Daily Mirror:

DAVID Cameron personally vetoed plans for a new property tax after donors threatened to ban Tory party fund-raising events from their mansions. Super-rich donors warned the Prime Minister that if he taxed their London townhouses and sprawling country estates they would refuse to host dinners to boost the Conservative Party's coffers.

A senior insider revealed: "The message went out - tax our mansions and you can forget us ever holding another black tie event for you at our homes ever again. Cameron could not have funded the party without these events so he had no choice. It was all highly embarrassing."

... Lavish Tory fund-raising dinners are regularly held in some of the most spectacular piles in Britain. But an insider said the message from Tory HQ fund-raising officials was that "almost all" big donors who offered their homes as venues for the party dinners were unhappy.

Lib Dem peer Lord Oakeshott accused Cameron and Osborne of "performing a hand-brake turn on donor orders". He told the Sunday Mirror: "The Tories are too scared to make their backers pay more than a £26-a-week council tax on their multi-million pound Mayfair mansions. That's not fair, it's feeble."

And no doubt dozens of Poor Widows In Mansions threatened to cancel their party membership subscriptions of £10-odd a year.

"Cameron sinks to new depths"

From the BBC:

British PM David Cameron has returned to the surface after plunging nearly €300,000 (£250,000) down to the deepest place in politics, the Cash For Questions Trench in the west end of London.He made the solo descent in a submarine called "Deep Pocket Challenger", taking over two years to reach the bottom. His party treasurer spent more than half an hour exploring the possibility of a large donation, before a speedy sacking once news reached the surface.

Undercover journalists were kitted out with cameras and lights so they could film the depths to which politicians will stoop. This is the first manned expedition into the murky depths of graft since journalists from the same newspaper tried to trap the then leader of UKIP with similar leading questions and journalists from the BBC caught out three Labour politicians - which took place in 2010.

Before the dive, the Prime Minister told the BBC that making the descent was "the fulfilment of a dream".

He said: "I grew up on a steady diet of sleaze at a time when politicians were living a totally corrupt reality. Peerages were being sold and the entire EU Commission has to resign for corruption. And that's what I grew up with, what I valued from my childhood."

Political Party Funding Fun (2)

Bayard asked: "Any suggestions as to how [the political parties concerned] actually got their mitts on the [taxpayer funded] loot (and kept the Ulstermen's off it)?"

Yup. Try Funding of Political Parties - A Brief Overview, start reading at page 10.

Political Party Funding Fun

In El Comm's press release of last week on donations to political parties, they mention casually that "Five parties also received a total of £2,211,200 in public funds." In case you're interested in which ones and how much, from pages 132 and 133 of this (pdf) the lucky recipients were:

Plain Cymru: £34,168.14
SNP: £53,288.77
Labour: £71,412.35
Lib Dems: £634,785.18
Conservatives: £1,417,545.93

Just sayin', is all.

One rule for UKIP, one rule for them ...

From the BBC:

The Liberal Democrats broke electoral rules when accepting donations from a south London MP's son, it has emerged.

Jonathan Kramer, son of Susan Kramer, MP for Richmond Park, donated more than £1,300 to the Liberal Democrats between December 2008 and March 2009. But the party was forced to repay the money when the Electoral Commission discovered Mr Kramer was not registered to vote in the UK. Parties can only accept donations from those on the electoral role [sic]...

Parties have 30 days to check whether donations are permissible or return them - something the Lib Dems failed to do. Legal action against the party was not necessary because the money was repaid as soon as the error was pointed out, the Electoral Commission confirmed.

No surprises there, then.

From Sky News:

No one will be charged over secret donations worth hundreds of thousands of pounds to the Labour Party from property developer David Abrahams.

Mr Abrahams gave Labour £650,000 through a series of associates to get round the law requiring political donors to be declared. The then General Secretary of the party Peter Watt resigned over the affair after it emerged he was aware of the arrangement...

Mr Abrahams also used a proxy to give money to Harriet Harman's deputy leadership campaign. The money was repaid in full when the true source of the cash was revealed.

My copy of PPERA is at home, so I can't give you chapter and verse, but the really important point here is not the lack of criminal charges, but the fact that such donations are forfeit and have to be handed over to El Comm; it is not enough merely to repay it to the original donor - see e.g. here.

Bastards.

"Lib Dems to outline crime plans"

There's one thing missing here...

What do the Lib Dems propose to do about tax evaders making large illegal donations to political parties?

Number crunching

Cost of maintaing The Royal Family: £40 million per annum.

Direct and indirect funding that political parties receive in each four-year Parliament: £1,750 million

"Low-level party funding a myth"

Michael Pinto-Duschinsky has ground the figures for The Policy Exchange and reckons that the political parties get about £1.75 billion of taxpayers' money for every Parliament, i.e. about £70,000 per MP per year.

Taxpayer funding for political parties & MPs' expenses

OK, let's chuck everything in the pot, think about human nature, and see what we can achieve with as few rules as possible:

1. Typical MP costs £200,000 a year, there are 529 English MPs, an average Parliament runs for four years, so that's £423 million over the course of a Parliament. There are other bits and pieces, so let's round it up to £460 million.

2. Just under 23 million votes were cast in England (including 1.3 million for parties which obtained no seats) in 2005, so that means the average vote was worth £20 to the parties.

3. Recent events have shown that the Labour Party couldn't care less about complying with their own internal rules or electoral law that they introduced; the Lib Dems are just as bad (but on a smaller scale) and a couple of Tory MPs have been caught with their hand in the till. If MPs defraud their own party, what do I care, frankly? That makes the MPs concerned and their Party look bad, so that's a result AFAICS, if they end up having their collar felt, that's a bonus. But these fraudulent expense claims and massive salary increases, gold plated pensions etc are an outrage.

4. My problem with taxpayer funding is that my tax money goes to pay for all the parties I didn't vote for. Plus it leads to even more corruption, it isolates politicians even more from real life , does nothing to prevent large donors trying to influence party policy. In theory, you could make donations illegal, but I have no objection to them (it is a free world) and secondly such a ban would be unenforceable. However much money parties have, they will still end up spending all of it (or in the case of the Labour Party "all of it and more'), it all just goes on advertising anyway, I can make up my own mind, thank you.

5. The problem with MPs being able to write themselves cheques for their own expenses and vote themsleves pay-rises seemingly at will is that they all are all in it together, there are, in practice, no restraints whatsoever.

Right ... here are a my three simple rules that will fix all this ...

a) MPs' salaries and pensions and expenses claims to be scrapped.

b) Each voter gets an extra box on his ballot slip asking "Would you like candidate's constituency branch to receive a grant of £5 a year for the life of the next Parliament?". This will encourage people to vote for minor parties (which would add to the gaeity of the nation) and it will be very interesting to see how many people vote for a party but fail to tick the box (i.e. tactical voters). If the parties get greedy and increase this to £10 or £15 etc, more and more people will refuse to tick the box in protest, so ultimately we should end up at the 'right' amount of funding. Conversely, parties may even find that they can increase their total income by reducing the amount down to a more modest amount like £4 or £3.

c) It will then be up to each party to decide internally how much the constituency branch can keep and how much has to be handed over to head office; how much salary their MPs will be paid; and it will be up to each party to check MPs' expense claims. If MPs waste less on salaries and expenses for themselves and their family, the party will have more left in the kitty to fight the next election. If the Campaign for Real Ale Party want to spend their grants down the boozer, then good luck to them.

Right. That's that fixed.