Income-Preserving Political Finance Reforms: Evidence from Three Spanish Reforms

Abstract

Political parties face a dilemma in the regulation of political money. Evidence from different sources shows that some parties demand contributions for public works contracts and special advantages that they grant to the private sector. Yet in the political finance reforms enacted in the aftermath of funding scandals, parties impose strict limits on corporate donations to please voters. A way to unravel this apparent contradiction while protecting the ability to monetize political power is to insert in the party funding reforms a number of loopholes and exceptions to legally donate to parties by circumventing the restrictions set on political money. This paper examines three successive reforms of the Spanish party funding regime and finds that the three reform acts contain provisions consistent with this income-preserving logic.