EUROPEAN COMMISSION
FOR DEMOCRACY THROUGH LAW
(VENICE COMMISSION)
COMMENTS
ON THE DRAFT
LAW
ON THE FINANCING OF POLITICAL PARTIES
OF CROATIA
by
Mr
Hans-Heinrich Vogel (Member, Sweden)
adopted by the Venice Commission
at its 68th
Plenary Session
(Venice, 13-14
October 2006)
I. Introduction
1. On
30 August 2006, the OSCE mission to Croatia and the Central State
Administration Office of Croatia invited the Venice Commission to prepare an
opinion and to attend the round table on the Draft Law on the Financing of
Political Parties before its submission to Parliament for the first reading.
The roundtable took place in the Croatian Parliament (Sabor) on 11
September 2006,from 9 a.m.until 2.30 p.m. The Venice Commission was represented by Mr H.-H. Vogel (Member, Sweden).
2.
After a fruitful exchange of views the Venice Commission was asked to finalise its opinion
and to send it to the Central State Administration Office of Croatia in October 2006.
3. The
Draft Law and the results of the 11 September Roundtable were discussed in the
plenary meeting of the Venice Commission on 13 and 14
October 2006.
4.
These comments were adopted by the Venice Commission at its 68th Plenary
Session (Venice,13-14 October 2006).
II. General remarks
5.
The Draft Law on the Financing of Political Parties provides a good
basis for regulation of financing of parties in Croatiaand in general corresponds to the standards of the Council of Europe in this
field. The Commission welcomes the initiative of the authorities to discuss the
draft with representatives of political parties, NGOs and international
organisations before its submission to the Sabor.
6.
However, there are some issues that remain unclear from the text of the
draft law and require further improvement.
III. Detailed observations
7.
Article 2, Paragraph 2, of the Draft law on financing of political
parties (hereafter “the Draft”) provides that political parties “for the
purpose of exercising their political goals” may gain income from certain enumerated
sources. According to Paragraph 4 of the same Article they may use the funds
referred to earlier in the Article “for the purpose of achieving goals
determined by the programme and statute of the political party.” It may be
noted that the legally accepted purpose when gaining funds is not the
same as the purpose when using them. The differences may be substantial:
the clause “exercising … political goals” may be interpreted as considerably
broader than the clause “achieving goals determined by the programme and
statute of the political party.”
8.
Article 2, Paragraph 2, of the Draft permits that political parties gain
income not only from membership fees, donations, publishing activity, sale of
advertising material and organisation of party manifestations, but also “from
the property that they own and from other legally permitted sources.” The
handling and use of membership fees and donations is closely regulated in later
articles of the Draft law, but there is no corresponding regulation on handling
and use of income derived from owned property and other legally permitted
sources. If there are regulations in legislation on non-profit associations, it
should be clarified whether and to what extent such regulations are applicable
on political parties.
9.
Article 3, Paragraph 4, is not entirely clear insofar as it makes it
mandatory “to keep records on the receipts of membership fees and donations”.
Does this obligation include an obligation to keep records concerning the other
income gaining activities mentioned in Article 2, Paragraph 2? Is there a
general obligation to keep books in compliance with international accounting
standards?
10.
Article 13 should include a provision corresponding to para 2 of Article
9. Contributions received from local or regional authorities should be reserved
for local or regional purposes.
11.
Article 14 (together with Article 8) provides for a special tax regime
for political parties which have “at least one representative in the
Croatian Parliament”. They “have the right to tax benefits pursuant to
the provisions of a special law” and these benefits are intended to be
applicable “for the activities that are strictly related to the political
activity of a party”. Does the reference to “activities” imply that a
special regime is to be created only for the VAT and possibly other taxes on
(business) activities, sales, etc.? Or is the intention to create a more
comprehensive special tax regime which includes income taxation, social
security taxes, etc.? Depending on the answers to these questions, political
parties with income “from the property that they own” as mentioned in
Article 2, Paragraph 2, may conduct considerable tax exempt activities, which
may develop into business activities, which otherwise would be taxed. Further,
it is not clear how this clause is related to Article 2, Paragraph 1, according
to which political parties shall be non-profit organisations. If combined,
Articles 14, 8 and 2 may permit the interpretation that political parties in
their capacity as non-profit associations are not allowed to (generaliter
or ad hoc) conduct profit achieving activities. Another possible
interpretation could be that political parties under the law (without exception
or, at least in principle) must be treated as non-profit associations even when
conducting profit achieving activities.
12.
Article 15, Paragraph 1, prohibits in quite broad terms any financing of
political parties by foreign legal persons etc. This clause is so broadly
written that it would make it a technical breach of the law for a political
party to receive any kind of ordinary funds for any purpose whatsoever from
authorities within the entire framework of the Council of Europe or the
European Union. The prohibition further down in the same paragraph concerning
certain “majority stock or share holders” should be more precise insofar
as to indicate whether this clause refers to an absolute majority of more than
50 percent of individual holders of any stock or shares, of individual holders
of stock or shares with voting rights, of one holder of more than 50 percent of
stock or shares (any stock or shares or stock or shares with voting rights
only) etc.
13.
According to the two Paragraphs of Article 16 political parties may
neither “perform political or any other pressure on natural and legal
persons when collecting donations for the financing of their activities”, nor
may they “promise political or any other counter-favours, privileges or
personal benefits of any kind to natural and legal persons when collecting
donations for the financing of their activities.”
a) These provisions
do not prohibit pressure and promises generally, but only “when collecting
donations”. This leads to the question what is going to happen, if pressure
is performed or promises are made before the technical
process of collecting donations starts or after it has been
finished.
b) Nor is it
clear, who the addressee may be of the prohibitions in Article 16. The
text indicates – quite generally – “political parties”, i.e. legal persons, and
the text implies – because legal persons act through their legal
representatives – that the prohibition may come into
effect only, if a legal representative would act in one of the prohibited ways.
Maybe it is the intention of the draft to also prohibit pressure and promises
by other persons acting more or less clandestinely on behalf of a political
party. If that is – or is not – the intention, it should be expressed in a way
which does not leave any doubt in this respect.
c) Neither of the
prohibitions in the two Paragraphs of Article 16 is mentioned in Chapter V of
the Draft on Penal Provisions. There seems to be no sanction at all, if
the prohibitions as stated in Article 16 are not observed. If a sanction is
provided for in the Penal Code or other legislation it should be clarified,
whether and to which extent Article 16 may be lex specialis in relation
to the other provision.
14.
According to Article 17, the first provision in Chapter IV of the Draft,
“financial operations of a political party” are to be supervised by the State
Audit Office and the Ministry of Finance – Tax Administration. Some details of
this supervision are regulated in Articles 18 to 20, the remaining Articles of
Chapter IV.
15.
The whole of Chapter IV leads to quite a number of questions, which in
one way or another affect all the Articles of the Chapter.
a) The first
question concerns the meaning of the term “supervision” (in Croatian “nadzor”).
Is it intended to be (more or less) a synonym for “financial audit” or is it (at least to some extent) intended to
include political aspects? The latter, it could be argued, may be necessary
with respect to Article 2, Paragraph 4, of the Draft which permits a political
party to use certain funds only to achieve “goals determined by the programme
and statute of the political party”; supervision under Article 17 could
therefore be said to include the task to check compliance with programme and
statute. But could that under the Constitution of Croatia really be a task for
the State Audit Office and the Ministry of Finance or either of these authorities?
This question leads to the further question, which of the two authorities
mentioned in the Draft is supposed to do what.
b) Is supervision as
provided for in Chapter IV intended to include the financial operations
of a political party, i.e. all the financial operations in their entirety,
or is it intended to limit supervision? To provide for limits would not be
unreasonable.
c) Similar questions
have to be asked concerning the keeping of records and their publication in the
Official Gazette and on the website of the political
party.
d) The obligation to
keep business records and to submit financial reports is
provided for in Article 18 should be extended to independent candidates.
e) According to
Article 20 the findings of the State Audit Office shall be published in the
Official Gazette. But what happens, if the supervised political party does not
agree with the findings? Is there an appeal to a Court of Law?
f) Some provisions
regarding the regulation of financing of electoral campaigns should be
introduced into the law, unless the matter has already been regulated by
another piece of legislation.
