Political finance in Brazil

Political finance

How are political parties and politicians funded in your jurisdiction?

In Brazil, there are three pieces of legislation that establish the framework for political parties, campaigning and elections:

• the Electoral Code (Law No. 4,737/1965) regulates the right to vote and election for office, how elections will take place, and the role of the electoral judicial system, and prescribes electoral crimes;
• the Political Parties Act (Law No. 9,096/1995) establishes the parameters for political parties’ by-laws and practices (the parties determine their own by-laws); it also determines how the parties will be funded; and
• Law No. 9,504/1997 establishes the rules for electoral campaigns, including requirements for candidates to run and to form coalitions, funding, accountability and campaign advertising.

Political parties are mainly publicly funded by the Special Fund for Financial Assistance to Political Parties (the so-called Partisan Fund). The distribution of these resources is made according to each party’s parliamentary representation.

A different framework is applied with regard to campaign contributions. In broad terms, individuals may contribute to electoral campaigns up to a limit of 10 per cent of their annual income prior to the election year, and legal entities are no longer authorised to make donations.

Must parties and politicians register or otherwise declare their interests? What interests, other than travel, hospitality and gifts, must be declared?

All political parties’ revenue and expenses must be annually reported for judicial review. If accounts are rejected or not correctly declared, the electoral justice system may apply different levels of sanctions.

During their terms, house representatives are entitled to some allowances and reimbursement of expenses, such as transportation, accommodation, telephone expenses, postal services, maintenance costs of parliamentary offices in support of parliamentary activity, food expenses, security services and use of consultancies.

Senators also have a monthly allowance to spend during their terms, or are reimbursed for those expenses. Expenses including medical and dental care, accommodation, travel tickets or leasing of aircraft are covered by the Senate if they are correctly reported by senators.

These interests must be declared to the respective house of Congress and made public to all citizens.

Are political contributions or other disbursements to parties and political officials limited or regulated? How?

Political contributions and other disbursements are highly regulated in Brazil. The 1988 Constitution determines in article 17, section 3 that political parties will be entitled to resources from the Partisan Fund and will receive the benefit of free access to television and radio broadcasting. These rules were changed in October 2017 by Constitutional Amendment 97 establishing the minimum threshold for political parties to benefit from these resources (the ‘barrier clause’). These rules, which came into force for the first time in the 2018 general elections and will be phased in gradually until full implementation in 2030, are as follows:

• parties must have obtained at least 3 per cent of the valid votes in the previous elections, that must be spread across a minimum of one-third of the federation states, and have at least 2 per cent of valid votes in each of these states; and
• parties must have elected a minimum of 15 federal house representatives spread across at least one-third of the federal states. Parties that fail to meet this threshold will still be entitled to run and elect candidates, but will not benefit from the Partisan Fund and the free television and radio exposure.

Consequences of the barrier clause have already been felt as a result of the 2018 general elections. The number of political parties represented in Congress is expected to go down significantly in the next term since 14 out of 30 parties have not met the minimum electoral performance to access to public funds in the next election. The precise number of political parties represented in Congress as of February 2019 will ultimately depend on possible political coalitions.

Partisan Fund resources derive mainly from the federal budget, but also from the collection of penalty fines applied to those who breach the Electoral Code. Additionally, individuals and legal entities may also make private donations to the Partisan Fund as long as they are earmarked and traceable. Distribution of fund resources is made according to each party’s parliamentary representation.

In addition to financial funding, political parties are entitled under the Constitution to free television and radio broadcasting. The counterpart to this indirect public funding comes from tax waivers granted to broadcasting companies. The minutes allocated to each party are directly related to the number of congressmen with mandates. In the case of party coalitions, their television and radio broadcasting may be aggregated.

Describe how political campaigns for legislative positions and executive offices are financed.

The electoral legal framework is established in Brazil by Law No. 9,504/1997, which has been modified many times.

Until 2016, both individuals and private entities were allowed to contribute to political campaigns, with different contribution caps. There used to be a contribution limit of 2 per cent of legal entities’ income and a limit of 10 per cent of individual annual income for contribution.

In an effort for more transparency and less corruption, changes were made to restrict campaign donations coming from legal entities. On 17 September 2015 the Supreme Court, having been called upon by the Brazilian Bar Association, ruled that campaign contributions coming from private legal entities were unconstitutional and would no longer be allowed. The ruling went into effect immediately. On 29 September 2015 Congress approved the ruling and the Executive Office enacted new legislation reinforcing the prohibition of campaign donations by private legal entities.

In 2017, other changes in campaign funding were approved by Congress to promote amendments to the Constitution (Amendment 97 of 2017) and to Law No. 9,504/1997. Among these changes, Law No. 13,487/2017 created the Special Fund for Campaign Financing (the Campaign Fund). Unlike the Partisan Fund (see question 19), which finances the activities of established political parties, the new Campaign Fund finances electoral campaigns. It is also subsidised by the federal budget and distributed among parties. It was created to fill the gap of private entities’ campaign contributions.

In summary, the current legal framework:

• allows individuals to contribute to electoral campaigns up to a limit of 10 per cent of their income;
• prohibits legal entities from contributing to political campaigns; and
• establishes the Campaign Fund to help finance electoral campaigns.

Although it is possible to argue that private sector interference in the elections results may have diminished - at least officially - there is no clear evidence that more transparency or less corruption came out of the new legislation. Allegations of undue interference by private companies in social media campaigning put at stake the fair use of political tools. Another consequence of changes in campaign funding legislation is the unbalance caused by multibillionaire donors. Individual campaign contribution is not a tradition in Brazil, so as soon as private entity donations were outlawed a few individual donors stood out and generated an imbalance in interests being represented in Congress.

Describe whether registration as a lobbyist triggers any special restrictions or disclosure requirements with respect to candidate fundraising.

Although admitted as a practice under the constitutional right to petition, lobbying is not yet regulated in Brazil and registration is not mandatory (or even a voluntary common practice). Therefore, there are no specific rules as to how lobbyists must observe fundraising and electioneering limits. The rules applicable to lobbyists will be the same as those applicable to citizens in general.

How is parallel political campaigning independent of a candidate or party regulated?

According to article 14, paragraph 3, item V of the Constitution, among other requirements, political candidates must be affiliated to a political party in order to run for elections.

However, the matter of independently running for political positions is pending judicial decision by the Supreme Court. The above-mentioned constitutional rule is being questioned in face of the American Convention on Human Rights (the Pact of San José), which limits the requirements for candidates to run for political elections and does not include in the list the condition of political affiliation. According to the arguments brought to the Supreme Court, the Pact of San José should prevail over the Constitution if it is more beneficial to citizens.

With regard to parallel campaigning to support or oppose a candidate or political party, the practice would not only be unusual in Brazil but is also likely to be considered as indirect campaigning by the Superior Electoral Court, which may fall into the category of forbidden benefits.

Electoral campaigns made via the internet, which includes all types of social networks, such as websites, blogs, WhatsApp and email, was authorised for the 2018 elections. All individuals may campaign using the internet, as long as its content is not supported by payment. This restriction does not apply for official campaigns, in which a Brazilian internet supplier can be paid to boost campaign contents in order to promote a candidate or party, but never to undermine other candidates. Fines will be applied in cases of non-compliance.