Opinion: Brazil’s Campaign Financing Rules

Opinion, by Michael Royster

RIO DE JANEIRO, BRAZIL – In 2015, Brazil’s Supreme Court (STF) declared unconstitutional the statute permitting companies to contribute to Brazilian election campaigns. In 2017 Congress created a “Fundo Eleitoral” (Campaign Fund) designed to finance the 2018 election campaign.

This Campaign Fund is in addition to a long-standing “Fundo Partidário” (Party Fund) whereby all registered political parties receive R$0.35 per registered voter in federal funds every year to support their day-to-day activities.

In 2018, the Campaign Fund will be R$1.7 billion, and the Party Fund will be almost R$900 million. Brazil’s electoral tribunal (TSE) has ruled that parties can use the Party Fund for election campaigns. Thus, Brazil’s 35 registered political parties now have access to R$2.6 billion, equivalent today to around US$700 million, to finance their campaigns.

All of this money has come out of the pockets of the taxpaying public — Brazil’s federal government has no substantial source of income other than its taxes. Individuals can donate money to political parties, but very few do and the amounts are insignificant.

Rich individual candidates, of course, can use their own personal funds in their campaigns, almost without limit. As a result, there are lots of rich white males in Congress today.

The rules for sharing the Campaign Fund are complex: (a) two percent of the total goes to each registered party; (b) fifteen percent goes to parties based on the number of their Senators in August 2017; (c) 35 percent goes to parties with at least one Federal Deputy, in proportion to the number of votes the party received in the 2014 election for Federal Deputies; and (d) 48 percent goes to parties based on their proportional share of Federal Deputies in August 2017.

Two percent of the Campaign Fund is slightly less than R$1 million, and six parties will get that amount even though they have never been able to win any seats in the Federal Senate or Chamber of Deputies.

At the other end of the spectrum, Brazil’s three principal political parties (MDB, PT and PSDB) will receive an average of R$200 million each, and four other parties will receive over R$100 million from the Campaign Fund.

All the parties with significant Campaign Fund and Party Fund revenue have announced they will spend most of it on re-electing those of their members who already have seats in Congress.

This is crucial to small parties, because beginning with the 2020 municipal elections, parties will be subject to a “threshold” rule that prevents them from receiving free radio and TV airtime or money from the Party Fund if they do not receive at least 1.5 percent of the valid votes for federal deputies in the 2018 election.

It’s also crucial to large parties, many of whose leaders are under indictment or investigation for criminal activities. Those who remain in Congress guarantee they can only be prosecuted by the STF; if they become private citizens, they are subject to Lava Jato (Car Wash) lower court prosecution.

The upshot of all this? The rich will get richer, the big parties will get bigger, and wealthy white males will continue to run Congress. There will be almost no turnover in Congress this year, so the 300 picaretas will all be back again in 2019, taking their accustomed places at the trough for the next four years.