Abstract of the judgment of 9 April 1992

Second Senate
Judgment of 9 April 1992
2 BvE 2/89 

Headnotes:

1. The Basic Law requires that political parties be free from state interference; this requires not only that their independence from the state be guaranteed but also that the political parties retain their character as freely formed groups rooted in the socio-political sphere (cf. BVerfGE 20, 56 <101>).

2. Contrary to the view previously held by the Court’s Second Senate, the Constitution does not prevent the state from allocating funds to political parties to finance the activities generally incumbent upon them under the Basic Law. However, the principle that political parties be free from state interference only allows the partial financing of general activities of political parties from state funds. The granting of financial support violates this principle if such financing relieves the political parties of the need to seek financial support for their activities from their members and affiliated citizens.

a) The total volume of such state support to a party may not exceed the sum a party’s generates from its own fund-raising efforts (cf. § 24.2 nos. 1 to 4 and 8 of the Political Parties Act) (‘relative upper limit’).

b) The financial resources the parties received from public funds in the years 1989 to 1992 must be regarded as sufficient as long as the existing conditions do not change substantially. Based on these allocations, the average annual amount constitutes the ‘absolute upper limit’ of state funds which may be allocated to the parties by the Federation and the Länder.

c) A party’s success with the electorate, which is reflected in the total number of its members as well as in the donations it raises, must be considered to a relevant extent in the scale according to which the available state funds are distributed to the parties; the details, however, are to be determined by the legislator.

3. The equal opportunity provision set out in § 22a.2 of the Political Parties Act (hereinafter: the Act) is incompatible with the right of political parties to equal opportunities in political competition resulting from Article 21.1 and Article 3.1 of the Basic Law (partial deviation from BVerfGE 73, 40).

4. A constitutional limit is imposed on permissible preferential tax treatment of membership fees and and donations to political parties where such preferential treatment reaches an extent that is capable of altering the given competitive situation between the parties in a significant manner. This limit is not reached if the tax advantage can be used in the same way by the majority of taxpayers.

5. With regard to the citizen’s right to equal participation in the political decision-making process, preferential tax treatment for party donations made by corporations gives rise to serious constitutional concerns (deviation from BVerfGE 73, 40).

6. The determination of the so-called disclosure limit (Publizitätsgrenze) in § 25.2 of the Act at DM 40,000 violates the fourth sentence of Article 21.1 of the Basic Law.

Summary:

I.

The Organstreit proceedings (dispute between constitutional organs) concerns the question of whether the new provisions, which entered into force on 1 January 1989 with the Fifth Act Amending the Law on Political Parties and Other Acts, violate the constitutional rights of the applicant – a political party – because they are incompatible with Article 21.1 and Article 3.1 of the Basic Law. The provisions at issue changed the calculation of the compensation to ensure equal opportunities (Chancenausgleich) (§ 22a.2 of the Political Parties Act), introduced a base payment (§ 18.6 of the Political Parties Act), and increased the disclosure threshold for party donations (§ 25.2 of the Political Parties Act) and the tax deductibility of membership fees and donations to political parties (§ 10b of the Income Tax Act, § 9 no. 3 of the Corporation Tax Act).

II.

The decision is based on the following considerations:

The participation of political parties in the political decision-making process within society is not limited to the preparation of elections. Thus, under constitutional law, it is not necessary to limit state financing of political parties to a compensation reimbursing the necessary costs incurred in the context of a political party’s election campaign. However, precautions must be taken to ensure that political parties do not become dependent on the state. The generation of income by the parties themselves takes precedence over state financing.

According to the principle of equal opportunities, the legislator may make the reimbursement of election campaign costs to a party subject to the condition that the party makes a serious effort to win an election and to implement its political programme.

The notion of base payments granted to political parties independent of their political success pursuant to § 18.6 of the Political Parties Act violates the principle that political parties be free from state interference, which follows from Article 21 of the Basic Law.

The equal opportunity provision set out in § 22a.2 of the Act is incompatible with the right of parties to equal opportunities in political competition resulting from Article 21.1 and Article 3.1 of the Basic Law.

The tax deductibility of donations made to political parties by corporations provides those natural persons who manage these corporations with an additional opportunity to exert influence on political decision-making processes; this opportunity is in fact supported by the state at the expense of other taxpayers, and is denied to other citizens. Since there is no compelling reason for this form of unequal treatment, § 9 nos. 3b) and 3c) of the Corporation Tax Act are unconstitutional; they violate the right of political parties to equal opportunities and the right of citizens to equal participation in the political decision-making process.

The same applies to the tax deductibility of membership fees and donations to political parties up to the amount of DM 60,000/120,000 per calendar year in accordance with § 10b.2 of the Income Tax Act. In this case, citizens with high incomes have a tax advantage when compared to citizens with lower incomes and are privileged in terms of their ability to influence the political decision-making process through donations to political parties. Overall, it should be noted that a donation of DM 20,000 or higher is generally capable of having a significant influence on a party's policy. § 34g of the Income Tax Act, on the other hand, which limits tax reductions to smaller donations, meets constitutional requirements.