Candidates submitting false declarations about the amount spent on their election campaign may risk losing their seat if elected, according to a Bill on party financing published yesterday.

Though regulations to cap spending have been in place for years, enforcement by the Electoral Commission has been very lax due to a number of loopholes and the “unrealistic” low thresholds.

It is now being proposed that candidates will be able to spend up to €20,000 as opposed to the current limit of €1,400 and double the amount if they are contesting two districts.

In case of European Parliament elections, the proposed capping is going up from €18,000 to €50,000, whereas in local council elections candidates may spend up to €5,000.

If the Bill becomes law it would also mean that for the very first time donations to political parties would be regulated.

The proposal is that no donation above €40,000 would be permissible and, in case of anonymous donors, a very stringent capping of €50 is being suggested.

However, parties would be allowed to receive “confidential” donations of up to €500 but would still be obliged to keep records of the source.

According to the Bill, the Electoral Commission can force the party to reveal the source if it has reasonable suspicion it is being abused to circumvent the law.

In case of donations of between €500 and €7,000, the Electoral Commission will be entitled to demand information about the source. Any other donation above that amount would automatically have to be included in the party’s annual returns.

Justice Minister Owen Bonnici, who presented the Bill, said that with realistic thresholds in place, candidates and, for the first time, parties would be expected to abide by the law or else face sanctions.

The Electoral Commission would remain the watchdog but would be beefed up with a team of auditors able to scrutinise party finances in detail.

If the Electoral Commission concludes that an MP filed a false declaration, it would be up to the Constitutional Court to decide whether to unseat him. However, for the sanction to become law, it would have to be backed by two thirds of the House, as it requires constitutional amendments.

Dr Bonnici said the government intended to have the Bill approved through all parliamentary stages before Parliament rises for its summer recess so it would become law as of January.

Political parties would then be expected to present audited accounts for next year sometime in 2016, at the end of their financial year, which might not necessarily coincide with the calendar year.

Dr Bonnici said that some of the thresholds had been lowered when compared to the original proposals listed in a White Paper published last February as a result of a two-month public consultation period.

He said the Bill represented a “historical step forward” for accountability at party level and thanked Law Commissioner Franco Debono for his contribution in drafting the legislation.

The Bill also obliges political parties to register themselves with the Electoral Commission by submitting information including details of their leader and officials, the emblem and the statute.

The Labour Party lauded the Bill, saying it was testament to its commitment in favour of accountability and “clean politics”.

Highlights of the proposed law

• Any cash, property, sponsorship and loans or services that are not given on commercial terms to a political party are considered as a donation.

• Income from entrance or other fees charged for participation in political activities may be deducted when calculating expenditure.

• Property devolved to a political party causa mortis and voluntary and unpaid work for the benefit of a party shall not be considered as a donation.

• Party accounts according to internationally audited standards have to be submitted annually or else parties may be liable for fines of up to €10,000.

• During the year, the party treasurer must compile three reports on the donations received, which must be presented to the Electoral Commission.

• Candidates, members and party officials are obliged to provide the required information to the treasurer and are liable to an administrative fine in the case of default.

Limits on donations to parties from one source:

• Amounts higher than €40,000 are not permitted.

• Anonymous donations cannot exceed €50.

• ‘Confidential’ donations up to €500 are allowed but parties must still record the source.

• Donations between €500 and €7,000 have to be recorded and the Electoral Commission is entitled to demand information about the source.

• Amounts above €7,000 are to be declared by reference to the source in the party’s annual returns.

Candidates’ expenditure in an election campaign:

• €50,000 in the case of MEP elections.

• €20,000 per district contested in general election.

• €5,000 for local council elections.

• These may be revised by the Justice Minister.

• Candidates must file their declaration within 10 days of being elected and the Electoral Commission must scrutinise the documentation within a month.

• In case of a false declaration, an elected candidate may be unseated by the Constitutional Court.

• Only those parties registered with the Electoral Commission will be allowed to contest an election.

• A party that persistently propagates xenophobia, homophobia or racism may be dissolved.