Political parties (Part II)

Huzaima Bukhari

“No organization can stay uncorrupt for long, be it a political party, a religious institution or a charity foundation—sooner or later the instinctual evils of greed and cruelty overwhelm the organization, fueled by its authoritative control over people”
― Abhijit Naskar, When Humans Unite: Making A World Without Borders

According to section 2(xxviii)) of Elections Act, 2017: (the Act) “political party” means an association of citizens or a combination or group of such associations formed with a view to propagating or influencing political opinion and participating in elections for any elective public office or for membership of a legislative body, including an Assembly, the Senate, or local government.

Usually political parties do not come into existence at the behest of just one person although it may have been footed by one. A group of like-minded persons who are full of enthusiasm to take on the reins of a country’s politics, initially with the intention of serving the people in their capacity as public office holders, agree to enter a contract with each other, resulting in the formation of a political party. Consequently, a party is generally a body of individuals with principally each member enjoying a status equal to the other. The one among them who they choose to be the leader is actually just a representative and not a dictator or someone who alone has veto power. As these political parties began to evolve, it necessitated the formulation of regulations to maintain control over the extent of their influence and internal working.

It may be appreciated that a political party is not a business organization engaged in making profits. It needs funds to sustain and carry on its work for which first the candidates pool in their resources and later, members of the public, advocacy groups, trade/labour unions and corporate bodies that find the party’s manifesto to their liking. Efforts are made to acquire more funds in order to finance administrative expenses and later support election campaigns. Since revenue is vital, fund-raising is perhaps the most important pillar of a party’s structure. There are advocates of both private and public funding for political parties both of whom have convincing arguments as to which is more plausible. So in other words, politics is a game of the rich and mighty and paupers, unless backed by the rich have practically no chance of holding public office no matter how much they are able and suitable. Having said that, if there is true democracy in a party, then this could become a possibility as has happened many a times in established democracies like that of USA and India.

Besides forbidding formation of a political party through foreign funding, section 204 of the Act explicitly prohibits taking donations directly or indirectly from a foreign source including any foreign government, multi-national or public or private company, firm, trade or professional association or individual. The “foreign source”, as per clause (b) of Explanation to section 204 “shall not include an Overseas Pakistani holding a National Identity Card for Overseas Pakistanis issued by the National Database and Registration Authority”.

The next most important thing related to political parties is the concept of accountability and rule of law. A party that does not respect regulations and considers itself above the law of the land has no business to impose its agenda on the people. If it does manage to gain power, then it has no justification to force the people to observe the law. This is akin to a thief telling others not to steal or a tax amnesty beneficiary insisting that tax evaders should be given exemplary punishment. Additionally, political parties have also some obligations that they are compelled to carry out among which section 210 of the Act reads as under:

“Information about the sources of funds.— (1) A political party shall, in such manner as may be prescribed, submit to the Commission within sixty days from the close of a financial year, a consolidated statement of its accounts audited by a Chartered Accountant on Form D containing—

• annual income and expenses;
• sources of its funds; and
• assets and liabilities.

(2) The statement under sub-section (1) shall be accompanied by the report of a Chartered Accountant with regard to the audit of accounts of the political party and a certificate signed by an office bearer authorized by the Party Head stating that—

• no funds from any source prohibited under this Act were received by the political party; and

• the statement contains an accurate financial position of the political party”.

In Pakistan, the Inland Revenue Service (IRS), part of the Federal Board of Revenue (FBR), is mandated under the Income Tax Ordinance, 2001 to probe financial affairs of any person. Although Income Tax Ordinance, 2001 does not specifically mention “political parties” by name but these are covered in section 80(2)(a) as “association of persons” that include “any artificial juridical person” or and any “body of persons”.   

A political party subsists on fee, contribution donations, in cash or kind, as defined in section 204 of the Act. Though a political party is not allowed to do business, yet under Income Tax Ordinance, 2001 the above items are considered as “income” so consequently, it has to file an income tax return or it would be guilty of violating the law.

Transparency in financial matters is extremely essential for the credibility of any organization. Stock markets thrive on this basis and public trust usually reflects in such corporate bodies that can boast of immaculate accounting procedures. The same holds true for political parties as well. For establishing their authenticity, it becomes incumbent upon them to not only declare their true income and expenditure statements to the Election Commission and IRS, but also make them public. 

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The writer, lawyer and author, is an Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Senior Visiting Fellow of Pakistan Institute of Development Economics (PIDE).