I. Introduction:

Well-publicized campaign finance scandals in Taiwan demonstrate the need for campaign finance laws that can stop the sale of political influence. Conversely, opponents of campaign finance reform contend that campaign finance laws are ineffective. Similar scandals in the United States prompted significant changes in campaign finance laws. The fallout from Watergate allowed the passage of the Federal Elections Campaign Act Amendments of 1974. Watergate may have also prompted Canada to adopt the Election Expenses Act of 1974. In the United States, a patchwork of campaign finance regulations prohibits the quid pro quo sale of political influence, but these regulations do not guarantee egalitarian elections. Similarly, Canadian campaign finance regulations designed to equalize candidate funds also fall short of their intended objectives.

Taiwan’s campaign finance laws are also in need of reform. Historically, Taiwan’s strict campaign finance laws hampered the political expression of minority political parties such as the Democratic Progressive Party (DPP). Taiwan’s parliament, the Legislative Yuan, expanded political freedoms by eliminating many speech restrictive provisions in the campaign finance laws. Unfortunately, some of these changes created loopholes that may result in corruption. The Legislative Yuan should first close potential loopholes in the campaign finance laws and then consider further revisions to promote egalitarian politics.

This Comment compares campaign finance reform in the United States and Canada to suggest a course for revising Taiwan’s campaign finance laws. Part II explains the relevance of campaign funding and highlights the danger to democratic legitimacy posed by high election expenditures. Part III provides a background of Taiwan’s campaign finance laws. Part IV compares campaign finance laws in Canada, the United States and Taiwan to identify areas in need of reform. Part V recommends specific changes in Taiwan’s campaign finance laws.

II. Relevance of Campaign Funding:

To run a successful political campaign, candidates need sufficient financing. Although money alone never guarantees victory in an election, lack of campaign financing usually guarantees defeat. For example, in the 1994 elections for the U.S. House of Representatives, under-funded challengers received fewer votes than well-funded candidates. These elections demonstrated that challengers needed at least $500,000 for an even chance of victory. Challengers raising less than that amount could expect defeat. Although one could argue that under-funded candidates would not have been successful regardless of the amount of campaign funds raised, the data indicates that successful challengers raised large sums of campaign funds.

Increased use of political advertising has raised the costs of elections. Although there are some electoral differences between the United States, Canada and Taiwan, the increased reliance on institutionalized mass media raised election costs in all three countries. In the United States, "Money has always been a critically important factor in campaigns, but the shift to expensive technology has made it the dominant factor." Even in Taiwan, where political advertisements are banned on television and radio, mass media has increased elections costs.

Since Taiwan’s 1989 elections, high campaign expenses have been especially prevalent. In 1989, illegal campaign expenses such as vote buying, treating, and lavish parties contributed to high election costs. By the 1995 Legislative Yuan elections, vote buying had become less prevalent, yet "Politicians did indeed spend a lot of money campaigning, more per seat than in many western countries."

High campaign expenses allow the opportunity for major contributors to influence politicians. Large donors such as political action committees tend to expect access, if not favors, in exchange for their contributions. Former Senator Bob Dole explained that, "[w]hen the Political Action Committees give money, they expect something in return other than good government." In the United States, most contributors cannot overtly buy a legislative member’s vote on a bill. They do, however, use their access to request legislative assistance for their clients.

III. Background of Campaign Finance Laws:

Campaign finance regulations primarily prevent corruption. Limiting contributions can prevent an individual from donating large sums of money in an attempt to bribe a candidate. Spending limits and public subsidies may also prevent corruption by decreasing a candidate’s need for contributions. Campaign finance regulations can also equalize wealth through two strategies: limits on candidate and political party spending that reduces the advantage of larger campaign funds; and public subsidies that mitigate the disadvantage of smaller campaign funds.

A. Campaign Finance Laws in the United States and Canada:

Most countries regulate election contributions. The United States regulates campaign finance under the Federal Election Campaign Act of 1971 (FECA) and the Federal Election Act Amendments of 1974. These laws prevent corruption by limiting the size of large contributions. The FECA also limits campaign expenses by setting maximum expenditures.

In Canada, the Election Expenses Act of 1974 governs campaign finance. The three goals of the Election Expenses Act of 1974 were: (1) to equalize money available to candidates; (2) to encourage a more open administration of election finances through disclosure of expenses and contributions; and (3) to encourage public participation in the political process through tax credits for contributions. The Election Expenses Act of 1974 sought to achieve these goals through expenditure limits, disclosure requirements, and public financing of political parties and candidates.

B. Campaign Finance Laws in Taiwan

In Taiwan, the Public Officials Election and Recall Law (POERL) governs elections of all public officials except the President. Enacted only a few years after U.S. and Canadian campaign finance laws, Taiwan’s election laws were introduced in a different political atmosphere.

Money politics played a fundamental role in Taiwan’s political history. When the Kuomingtang (KMT) arrived in Taiwan in 1945, they imposed martial law leaving themselves the only legally recognized political party. The KMT confiscated property from the Japanese colonial government to create state run enterprises. To gain support of the Taiwanese elite and maintain control of the central government, the KMT distributed these resources to factional supporters. Thus, the KMT maintained control through martial law and through selling favors to local factions in exchange for political support.

The KMT maintained elections and allowed non-KMT candidates to run against their candidates. Although KMT candidates had the advantage of drawing funds from state run enterprises, non-KMT candidates sometimes won. After four decades of martial law, the KMT initiated political reforms. In 1986, the KMT experimented with limited elections and later allowed political opposition. By 1989, the more liberal Democratic Progressive Party (DPP) emerged as the KMT’s main political competitor. The DPP steadily gained influence after 1986, despite the restrictive election laws. In 1993, a right wing faction of the KMT broke away to form the New Party. By 1995, the KMT maintained only a narrow majority in the Legislative Yuan.

The March 1996 elections ended the democratic transition period. For the first time the parliament was entirely elected by the people. Taiwan’s inclusive political climate allowed formerly exiled overseas Taiwanese to return as candidates. By 1996, the former one-party authoritarian regime had yielded to coalition politics.

The KMT drafted the original POERL in 1980, when Taiwan was under martial law. Most of the original campaign finance provisions of the POERL are remnants of that era. To maintain tight control over the elections, the 1986 POERL included contribution limits, expenditure limits, speech restrictions and reporting requirements. With an established democratic system, the Legislative Yuan removed many of the most speech restrictive provisions. Unfortunately, the revised laws contain potential loopholes that may allow corruption. To safeguard past democratic gains, the Legislative Yuan should revise the campaign finance laws to prevent corruption. The Legislative Yuan could also use campaign finance laws to further egalitarian politics.

IV. Areas For Potential Reform:

A. Contribution Limits

Contribution limits primarily deter exchanges of contributions for a candidate’s future favors because contributors may seek to influence a candidate with campaign contributions. These campaign contributions can be made in many ways, including, for example, free trips on luxurious corporate jets. On the other hand, some lobbyists complain that incumbents demand campaign contributions for their time and attention.

Contribution limits can reduce misbehavior on both sides. Capping the amount of large donations can also force candidates to seek campaign contributions from a larger number of donors. This would obligate candidates to a broader constituency rather than to a few special interest groups.

Canada and the United States employ two divergent approaches towards contribution limits. Canadian federal law does not limit the size or source of contributions. It only requires candidates to report the amount of the contribution, and the identity and class of a contributor donating over Can$100. Canadian political candidates are free to solicit money from foreign and domestic sources, including individuals, trade unions, corporations and other organizations. Unlike the United States, Canada relies primarily on disclosure to prevent corruption.

The United States perceives that large campaign contributions can foster corruption. To address this concern, the Federal Election Campaign Act of 1971 (FECA) limits the amount of contributions to candidates, party committees and political action committees. In Buckley v. Valeo, the Supreme Court held that contributions limits were constitutional. Equating campaign contributions with political speech, the Court reasoned that limits on political speech are constitutionally permissible only when they (1) serve a sufficiently important state interest and (2) are closely drawn to avoid unnecessary abridgment of associational freedoms. Furthermore, the Court held that the $1000 per candidate limit provided by the FECA was necessary to prevent corruption or apparent corruption.

The state interest in Buckley only justifies restricting campaign contributions which are large enough to potentially corrupt politicians. In Carver v. Nixon, the Eighth Circuit Court of Appeals considered the constitutionality of a state statute which limited individual campaign contributions to between $100 and $300 per election. The court perceived the contribution limits were more severe and less justified than the $1000 limit held constitutional in Buckley. The court then concluded that the limits violated contributors’ constitutional rights of freedom of speech and association. Thus, the U.S. Constitution guarantees the right of individuals to make small campaign contributions.

In addition to regulating the size of contributions, campaign finance laws in the United States also limit the source of contributions. The FECA does not allow corporations to contribute to campaigns from corporate funds. Corporations are allowed to establish PACs to raise voluntary contributions. Unfortunately, the voluntariness of these contributions is debatable because corporations can coerce contributions from their officers and employees.

In Taiwan, the POERL not only allows corporate contributions, but also allows corporations to contribute more than individuals. The POERL limits contributions to the lesser of a set limit or an income percentage. Individual contributions are limited to N.T.$20,000 (U.S.$714) per candidate and N.T.$200,000 (U.S.$7140) per party, and 20% of the individual’s annual income. "Profit seeking enterprises" are limited to the lesser of N.T.$300,000 (U.S.$10,714) per candidate and N.T.$3,000,000 (U.S.$107,143) per party, or 10% of their annual income. Thus, corporations are allowed to contribute more than ten times an individual’s allowable contribution.

Allowing corporate contributions is problematic because corporations can make contributions in exchange for improper political favors. Allowing large corporate contributions compounds the risk of corruption. The POERL allows corporations seeking public contracts to contribute to the same public officials who will later approve those contracts. Mandatory reporting requirements can discourage candidates from accepting such contributions. Faced with the high costs of campaigning, however, candidates may prefer to risk embarrassment in the media rather than a large debt. Allowing large corporate contributions also gives KMT candidates the advantage of contributions from KMT owned enterprises. Some DPP candidates in the 1989 elections complained that KMT candidates misused funds from KMT owned industries.

Because of contribution loopholes, merely lowering the amount of corporate contributions will be ineffective. The "soft money" loophole in the United States is one way individuals and corporate PACs circumvent contribution limits. In the United States, the FECA strictly limits the amount of money individuals and PACs can give to specific candidates, yet the FECA does not regulate contributions provided for party building efforts.

Contributions to state and local party organizations are supposed to fund state and local volunteer activities such as voter registration, get-out-the-vote drives and bumper stickers. In practice, local party organizations often misuse funds by advocating specific candidates. State and local party organizations can circumvent contribution limits by spending soft money on behalf of the national party. Thus, soft money can finance television advertising for presidential candidates. Although soft money can promote grass-roots political participation, some campaign finance reform advocates called for a ban on soft money. A less drastic alternative would be to regulate the use of "party money" to advocate a particular candidate.

Taiwan does regulate contributions for general party building. In 1994, the POERL limited individuals to the lesser of N.T.$200,000 (U.S.$7140) per party or 20% of the person’s annual income. "Profit seeking enterprises" were limited to the lesser of N.T.$3,000,000 (U.S.$107,143) per party or 10% of their annual income.

Taiwan faces an even larger soft money loophole than that of the United States. The POERL limits contributions from individuals and profit organizations to candidates and political parties, but fails to regulate contributions from nonprofit organizations such as PACs. Corporations and individuals reaching the maximum contribution limit can simply contribute through a PAC to avoid contribution limits. The contribution limits in the POERL fail to prevent the corrupting influence of large contributions and corporate contributions.

The tax deductibility of campaign contributions in the POERL also favors corporations over individuals. Campaign contributions have been tax deductible since the 1989 elections, subject to certain limitations. Individuals can still deduct up to N.T.$20,000 for contributions to candidates and up to 20% of their gross income for contributions to political parties. Businesses are still allowed to deduct campaign contributions as ordinary business expenses. They can deduct up to N.T.$300,000 for contributions to candidates and up to 10% of their taxes for contributions to political parties. Encouraging large corporate contributions implies that businesses are expected to contribute to receive preferential treatment or avoid unfavorable taxes. Favoring corporate contributions over individual contributions may also discourage small individual contributions.

The POERL also treats a campaign contribution as a personal gift to a candidate. The POERL condones the commingling of personal and campaign funds by allowing a candidate a personal tax deduction for campaign expenditures that exceed contributions. Allowing the commingling of campaign funds with personal funds risks corruption and adds to the appearance of corruption.

B. Expenditure Limits

Expenditure limits set a maximum dollar amount for candidate and political party campaign expenses. Expenditure limits diminish the advantage of personal fortune and large campaign funds. By spending less, candidates should be less indebted to large campaign contributors. Expenditure ceilings, however, also limit candidate speech since advertising expenses are a part of campaign expenditures. Even as early as Canada’s 1979 general election, the majority of campaign expenditures paid for television and radio advertising. Thus, every election system’s expenditure regulations necessarily balance the value of political speech against the value of egalitarian elections.

The United States values unlimited political speech over egalitarian elections. The Supreme Court in Buckley v. Valeo, held that the FECA’s campaign expenditure limits were unconstitutional. The Court reasoned that restricting expenditures necessarily reduced the quantity of political speech because television and radio ads were "indispensable instruments of effective political speech." After equating speech with political advertising expenses, the Court required an important government interest to justify the FECA’s restriction on political expression. The Court then held that no government interest could justify the FECA’s campaign expenditure limits, noting that the Act’s contribution limits and disclosure provisions already alleviated the potential for corruption.

The Court also concluded that the government’s interest in promoting egalitarian elections did not justify the FECA’s expenditure ceiling. The Court asserted that "the concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment, which was designed ‘to secure the widest possible dissemination of information . . .’" Thus, the desire to promote egalitarian elections through expenditure limits failed to justify the abridgment of candidates’ First Amendment rights.

Canada’s use of spending limits demonstrates its preference for egalitarian public participation over unlimited political speech. Most Canadian jurisdictions impose spending limits during the election period. The Canadian Supreme Court weighed the value of egalitarian elections against the value of free speech. In Regina v. Blake, the Canadian Supreme Court addressed the constitutionality of advertising expenditure limits in the Elections Finances Act of Manitoba. Unlike the United States, the Canadian Supreme Court refused to equate speech with advertising expenditures, and held that limiting advertising expenses did not restrict the speech of political candidates. The Canadian Supreme Court also decided that promoting public confidence and egalitarian political participation would justify the regulations even if limiting advertising expenses restricted the speech of political candidates.

Canadian federal law continues to limit campaign expenses. Unfortunately, political parties can circumvent expenditure limits because expenditures are narrowly defined as only those that directly promote or oppose the election of a candidate during the official election period. Canadian law fails to recognize expenses outside the official election period, such as money spent on offices, staff and overhead. When a political party provides offices and staff to promote a candidate, only a small portion of these expenses are considered a candidate’s campaign expenses.

Taiwan’s campaign finance law has included expenditure limits since the drafting of the POERL in 1980. The POERL calculates the campaign expenditure limits for each pair of presidential and vice presidential candidates by multiplying 70% of Taiwan’s total population with N.T.$15 and then adding N.T.$80 million. This formula would have allowed N.T.$302.45 million (U.S.$10.8 million) for the 1996 presidential and vice presidential elections. The POERL also limits campaign expenditures for non-presidential public officials. To determine expenditure limits in the National Assembly, Legislative Yuan, State Council, and municipal city council, the POERL multiplies 70% of the total population times N.T.$15 plus a fixed amount. For provincial governor, municipal mayor, magistrate and city mayor elections, the POERL sets the maximum expenditure at 70% of the total population multiplied by N.T.$8 plus a fixed amount. The fixed amount varies according to the office and ranges from N.T.$10 million (U.S.$357,143) for a provincial governor to N.T.$80,000 (U.S.$2857) for an aboriginal tribal chief.

Taiwan’s expenditure limits are effective when properly enforced. Taiwan’s expenditure ceilings might seem high, but Legislative Yuan candidates often exceeded them, even in 1989 when inflation had not yet eroded the limits. One Legislative Yuan KMT candidate, Wu Li-yi stated publicly that "he would spend N.T.$30 million (over one million U.S. dollars) on the election and his DPP opponent would spend double that."

Taiwan should reconsider the role of expenditure limits in the campaign finance regulations. When first drafted in 1980, the POERL represented the current balance of free political speech against egalitarian elections. After the lifting of martial law and the democratization of the elections, the legislature should rebalance free political speech against the campaign expenditure limits.

C. Advertising Regulations

Limits on advertising directly control the amount of speech available to candidates, but can also provide a more level playing field. Canada justifies political advertising regulations on the basis of equitable apportionment of airwave resources. Canada’s Election Expenses Act limits political advertisements to the last twenty-eight days of the campaign period. Thus, wealthy candidates cannot benefit from early advertising campaigns. Shorter advertising campaigns, being more affordable, allow candidates a more equal opportunity to advertise.

While Canada can claim to limit political speech for equitable reasons, Taiwan’s partisan media history shows that direct advertising limits have had inequitable results. Traditionally, the KMT government controlled all of Taiwan’s news media. During the elections, the news media could give the KMT generous and favorable news coverage while briefly mentioning opposition candidates. The POERL also banned political advertisement on television and radio, allowing candidates only government sponsored television and radio news coverage. When the POERL was first enacted in 1980 it also prohibited political demonstrations. By 1989, the POERL allowed street demonstrations, public speeches and political rallies, but restricted when and where they could be held. Thus, the POERL limited DPP candidates to print media such as magazines, newspapers and direct mail.

In 1994, political advertisements on television and radio were still banned. When the KMT also refused to grant television and radio station licenses to the DPP, the DPP sponsored the creation of illegal cable television and pirate radio stations to campaign for the 1992 elections. These illegal stations provided election coverage, community news and political commentary. In 1993, the Legislative Yuan legalized cable television and began licensing spare frequencies. With the proliferation of cable television, Taiwan truly developed into a mass media society and candidates began appearing on talk shows.

When the Legislative Yuan reconsiders the television and radio advertising ban, they may agree with the U.S. Supreme Court in Buckley, finding television and radio to be "indispensable instruments of effective political speech." The Legislative Yuan must then decide how to regulate network and cable advertising.

D. Independent Expenditure Limits

Campaign finance regulations can also regulate independent expenditures. Independent expenditures are "funds spent independently by interest groups to either support or oppose candidates." Usually these expenditures pay for political advertising through television, radio or direct mail. Expenditures are only "independent" where they pay for political messages not prepared in coordination with a candidate.

Limiting candidate and party spending while allowing unlimited independent expenditures would encourage contributors to incur expenses on behalf of candidates. Wealthy special interests could outspend candidates and political parties.

The Canadian legislature feared manipulation of the electoral system by wealthy special interests. In 1974, this concern prompted them to prohibit independent expenditures in the Election Expenses Act. Since the Canada Election Act required the publisher’s name and address on election literature, only registered political parties and candidates could authorize election literature. Opponents of the independent expenditures ban claimed that these laws effectively prohibited all speech unauthorized by registered political parties and candidates.

The Canadian Supreme Court held the prohibition on independent expenditures unconstitutional in National Citizens’ Coalition Inc. v. Attorney General Canada. Under section one of the Canadian Charter of Rights and Freedoms, the Court weighed equality in federal elections against the individual’s freedom of expression through special interests. The Court concluded that free speech outweighed the risk of election manipulation.

This holding unintentionally created a loophole in Canada’s expenditure regulations. Since advertising expenses comprised the majority of independent expenditures, contributors could spend unlimited amounts of money promoting a candidate instead of directly contributing to the candidate’s campaign. In addition, candidates could avoid exceeding expenditure limits by allowing wealthy special interests to pay for advertising expenses.

The U.S. Congress also tried to eliminate independent expenditures, but the U.S. Supreme Court held that such limitations unconstitutionally restricted political speech. In Buckley, the Court reasoned that no stated state interest could justify limiting independent expenditures because advertising money was of limited utility if the contributor did not coordinate with the candidate. Also, the lack of a prior agreement would limit the possibility of exchanging of advertisements for political favors. Thus, the United States allows unlimited independent expenditures.

To prevent independent expenditures from circumventing contribution limits, U.S. campaign finance laws treat money spent expressly advocating a candidate as a contribution to that candidate. Thus, contribution limits prevent unlimited independent expenditures.

Early elections in Taiwan allowed little political participation by noncandidates. To prevent disorder and interference by noncandidates the POERL banned all independent speech by allowing only candidates, their registered assistants and political parties to participate in "campaign activities." "Campaign activities" included public speeches, printing or distributing campaign materials, public demonstrations, and mass-media broadcasting or advertising. Strict regulations in the POERL went as far as requiring handbills be signed by the registered candidate.

By 1994, Taiwan’s Legislative Yuan liberalized political speech and eventually lifted the ban on independent speech. Unfettered political speech should foster democracy, however, wealthy special interests are now allowed to spend unlimited amounts of money to influence elections. One could argue that political advertising by special interests would strengthen a democracy. Unfortunately, contributors reaching their contribution limit can circumvent the limits by substituting independent political advertising for donations.

E. Public Subsidies for Candidates and Parties

Public subsidization of election campaigns can mitigate high campaign costs and reduce the risk of corruption. Public subsidies can also serve egalitarian goals by assisting under-funded candidates. On the other hand, public subsidies can create their own problems.

In the United States, only presidential campaigns are publicly funded. The Presidential Campaign Fund receives revenue from a provision on the individual income tax return form. The provision allows each taxpayer to designate a certain amount of money to subsidize the presidential campaigns. Even though taxpayers are told that contributing to the fund will not change their personal tax liability or refund, participation has never exceeded 30%.

The Presidential Campaign Fund disburses the funds raised in the voluntary tax checkoff to candidates who agree to limit their expenses. Unfortunately, these expenses do not include spending soft money. Thus, public financing in the United States merely gives qualified candidates equal shares of the revenues from the tax checkoff. This scheme assists small parties that are able to raise the requisite number of contributions. Because candidates need only collect a large number of contributions to qualify for public funds, the public cannot individually choose a recipient candidate or the amount of the public subsidy.

Candidates receiving a fixed subsidy for each vote received would be funded in proportion to their popularity. Taiwan’s public funding scheme reimburses candidates for public offices. After a 1989 revision to the POERL, the election commission reimbursed candidates and political parties a certain amount of money for every vote received. Under the 1989 revision, candidates were reimbursed N.T.$10 (U.S.$0.39) for every vote in excess of seventy 5% of the votes needed for victory.

In 1996, the Legislative Yuan amended the POERL to reimburse political parties. The POERL later increased the amount of the reimbursements. The government also subsidized party expenditures by N.T.$5 for each vote their candidates received over 5% of the total votes cast in the election. The 1994 POERL also reimbursed candidates N.T.$30 for each vote exceeding one third of the votes sufficient to win in a one seat election or half the votes it would take to win in an election for two or more seats.

Because candidates and political parties are funded in proportion to their popularity, this system favors candidates from large and organized political parties. Small political parties that receive less than 5% of the popular vote may never receive funding. Also, recently registered political parties and candidates in their first election do not receive money until after the election. This deters new political parties because their better funded competitors are also armed with reimbursements from prior elections.

When the KMT controlled Legislative Yuan promulgated the public finance provisions in the POERL for the 1989 elections, they intended public subsidies to prefer large political parties. The KMT continues to promote a two party system. On the other hand, this preference for candidates from large and organized political parties would not deter personally wealthy mavericks from funding their own campaigns as independents.

Public finance can also benefit the KMT. Historically, the KMT relied on their party-owned corporations to finance their candidates’ campaigns. In 1991, KMT party-owned enterprises were earning more than N.T.$4 billion a year (U.S.$161 million) in dividends allowed the KMT to maintain three thousand full time staff. Thus, the KMT has not required a broad base of contributors or even a few large contributors. Accepting public subsidies would allow KMT candidates to be less indebted to their party-owned corporations. This would legitimize the KMT party by eliminating the appearance of corruption.

While the public subsidy scheme provides many benefits, it is also flawed. The public subsidy scheme appears corrupt because candidates receive the subsidies as personal income. Although the KMT controlled the drafting of the public subsidy provisions, it was the DPP who advocated for public subsidies. DPP candidates have been criticized for accepting reimbursements. Because public subsidies can be expensive, maintaining a public subsidy scheme requires popular support. To maintain the viability of public subsidies, Taiwan’s Legislative Yuan should revise the POERL to eliminate the appearance and possibility of corruption.

F. Government Provided Media Time

In addition to providing funds for political parties and candidates, public subsidies can also provide free television or radio time. Because advertising can consume a large portion of a candidate’s campaign expenditures, free television or radio time can greatly alleviate campaign costs. Like public subsidies, government provided media time can reduce the risk of corruption and assist under-funded candidates.

Canada has embraced government provided television and radio time by requiring every broadcaster provide 6.5 prime time hours "for transmission of political announcements and programs produced by or on behalf of the registered parties." The 6.5 hours are apportioned according to a party’s representation in the legislature or by their number of candidates.

Taiwan’s public finance system is similar to the Canadian system. Taiwan’s Central Election Commission buys television time and allocates it to the candidates. Taiwan has also maintained a tradition of televising a live campaign forum, though some candidates prefer not participate in televised presidential debates.

The role of the official campaign forum has diminished since it was first sponsored. When the POERL was first drafted, Taiwan only had three KMT controlled broadcast television stations. The government’s tight control over the news media forced candidates to rely on the government sponsored programs. Today, cable television provides many channels capable of providing unofficial political news and commentary. The DPP’s broadcast and cable television stations have diminished the informational role of the government sponsored programs. Because the Election Commission buys television time instead of appropriating it from the stations, Taiwan’s Legislative Yuan should consider whether government subsidized television time is worth its cost.

The POERL also requires the Election Commission to provide an election bulletin detailing each candidate. Because publicizing a candidate by direct mail can be expensive, inadequately funded candidates may not be able to afford even limited mailings. Widely circulated election bulletins ensure that voters have at least minimal familiarity with all candidates before election day. Unfortunately, election bulletins are also expensive. Canada experimented with similar election bulletins for a short while, but then eliminated them because of their cost. Taiwan’s Legislative Yuan should also consider whether the Election Commission should continue to prepare election bulletins.

V. Recommendations for Revisions to the POERL:

Taiwan’s Legislative Yuan should revise the campaign contribution and expenditure limits in the POERL to prevent corruption and the appearance of corruption. The revised POERL can also promote political equality between large and political small parties.

A. Recommendations on Contribution Limits

Contribution limits in Taiwan have followed developments in the United States by limiting large contributions to prevent corruption and the appearance of corruption. Taiwan’s Legislative Yuan would probably find inadequate the Canadian scheme of relying solely on disclosure. The POERL should prohibit direct corporate contributions and regulate contributions from nonprofit organizations. Allowing large corporate contributions would allow corporations to buy political favors.

The POERL prohibits contributions from government enterprises and corporations who receive "contributions" from the government. The term "contributions" seems ambiguous and may not include granting pork projects. Thus, the POERL should also expressly prohibit government contractors from contributing to candidates.

In the United States, the FECA prohibited contributions from government contractors. The current U.S. campaign finance laws define government contractors narrowly. The definition would include closely held corporations, but would exclude their majority shareholders. The Taiwanese Legislative Yuan should construe the term "government contractors" broadly to include business entities and majority owners of business entities that have negotiated or are negotiating a contract with the government. A broad prohibition of contributions from government contractors would prevent corruption and the appearance of corruption.

The Taiwanese Legislative Yuan should further revise the POERL to regulate nonprofit organizations. The United States allows influential PACs, but limits abuse by expressly preventing conduit contributions, and by requiring PACs to be run independent of party fundraising committees. To prevent contributions through straw donors posing as independent nonprofit organizations, the POERL should require nonprofit organizations to be independent from candidates and political parties.

B. Recommendations on Expenditure Limits

Notwithstanding these limitations, the Taiwanese Legislative Yuan should continue to set expenditure limits to promote egalitarian democratic goals. When deciding the scope of expenditure limits, the Legislative Yuan should examine Canadian expenditure limits. Because Canada’s narrow definition of campaign expenditures allowed candidates to circumvent the limits, Taiwan’s Legislative Yuan should adopt a broad definition of campaign expenditures.

A broad definition of campaign expenditures should include the party overhead that often benefits candidates. In Taiwan, party overhead can be large since most political parties have or are establishing party newspapers, television stations and radio stations. The Legislative Yuan should revise the POERL to consider certain party overhead as campaign expenditures.

Party presses should be considered campaign expenses. Taiwan’s media has had a very partisan history. By 1997, the KMT still maintained control of most newspapers, radio stations and television stations. Because the KMT controls the three major network stations, the KMT can enjoy favorable coverage while limiting the media access of others.

In response, the DPP created their own television stations, radio stations, newspapers and internet websites. Party run television and radio stations may not be run exclusively to promote a political ideology. It may be difficult to distinguish between candidate campaign advertisements and favorable news coverage. Thus, the POERL should define campaign expenses to include the cost of running a television station to promote candidates.

C. Recommendations on Advertising Regulations

Taiwan’s Legislative Yuan should revise the POERL to end the ban on television and radio advertisements. Because the POERL was drafted before cable television, the ban on television advertisements may only be thought to apply to Taiwan’s major network television stations. Although advertisements on cable television may be legal, ending the blanket ban on television and radio advertisements would legitimize political speech by removing any uncertainty. Allowing DPP candidates to buy time on major network television stations would also allow them to forego establishing party run stations. Eliminating such unnecessary duplication would lower campaign costs and be more economically efficient.

Although television and radio advertising should not be banned, other policy considerations may justify advertising regulations. For example, Canada allows political advertising, but also intends to control election expenses, equitably apportion airwave resources and prevent incumbents from advertising with treasury funds. Thus, Canada’s Election Expenses Act limits political advertisements to the last twenty-eight days of the campaign period, with special provisions for radio and television. Advertising expenses are also campaign expenditures and thus limited accordingly.

To control costs and equitably apportion airwave resources, Taiwan can also adopt the Canadian model of limiting political advertisements to an official election period. During Taiwan’s twenty-eight day election period, campaign expenditures should include the cost of party controlled television and radio stations used to advocate particular candidates. This regulation would level the playing field by limiting the KMT’s advantage of party controlled television stations. This regulation would also limit election costs, and keep candidates and their political parties out of debt.

D. Recommendations on Independent Expenditure Limits

Because Canada’s ban on independent speech was unconstitutional, candidate speech was limited to the benefit of independent speech. Thus, the Canadian legislature failed to equalize the spending ability and influence of wealthy special interests. Although egalitarian spending is a debatable policy goal, unlimited independent speech did create a loophole in Canada’s contribution limits. Independent political advertising can now replace contributions. The U.S. legislature, also foiled by the judiciary, limited independent speech by treating political advertising as contributions where contributors coordinate with a candidate regarding the advertising.

In Taiwan, unlimited independent speech has fostered political discourse and democracy, but independent speech should be limited to prevent circumvention of contribution limits. Taiwan’s Legislative Yuan should revise the POERL to implement the U.S. approach. Political advertising advocating a candidate should be considered a campaign contribution to that candidate.

In addition to limiting political advertising under the contribution limits, further restrictions on independent speech could be justified if the Taiwanese Legislative Yuan decided to implement egalitarian policies. In Taiwan, political advertising has often come from special interests such as party presses and affiliated news media. Although party presses are independent from candidates, they do coordinate with candidates to provide free advertising. The DPP has complained that KMT controlled television and radio stations give the KMT an unfair advantage in elections. Incorporating the cost of political advertising by party presses into the definition of campaign expenditures would provide candidates equal access to mass media. DPP newspapers and KMT television stations would be allowed equal funding.

E. Recommendations on Public Assistance

Taiwan should continue public funding to decrease the role of big money contributors. Further revisions in the public funding laws would decrease corruption and increase public participation. Unfortunately, the current system appears susceptible to corruption and manipulation because DPP candidates are the largest beneficiaries as well as the same group who advocated for the inclusion of a public subsidies provision in the POERL. Thus, Taiwan’s Legislative Yuan should revise the POERL to give more subsidies to political parties and less money to candidates. If political parties received the bulk of the subsidies, the public subsidy system would appear less corrupt.

To further decrease corruption and the appearance of corruption, the POERL should expressly prohibit personal use of political contributions and public subsidies. Prohibiting personal use of campaign funds and public subsidies requires a great deal of willpower and discipline. In the United States, some politicians were able to exercise some self control. Other politicians had less self control. In 1980, the U.S. Congress decided that the law had to change. Thus, they amended the law to expressly prohibit any ‘new’ members of Congress from using campaign funds for personal use.

By 1993, Congress was mostly comprised of new members who were prohibited from using campaign funds for personal use. These "new" members with nothing to lose, eliminated the grandfather clause. Since then, candidates could only use excess campaign contributions by (1) defraying their expenses in connection with official duties, (2) contributing them to charity, or (3) transferring them to a political party committee.

Taiwan’s Legislative Yuan should follow the U.S. approach. Because of political realities, Taiwan’s Legislative Yuan may not want to immediately limit their own personal benefits. They can, however, prohibit the personal use of campaign funds by new legislative members. The new legislative members could later eliminate all personal use of campaign funds.

F. Recomendations for Government Sponsored Media Time, Official Campaign Forum, and Official Election Bulletin

Taiwan should revise the POERL to continue the current policy of providing media time to candidates. Government provided media time poses less risk of corruption than cash reimbursements because media time would be difficult to pocket for a candidate’s personal gain.

The Central Election Commission should not rely solely on candidate produced advertisements to inform the voters. In Canada, government provided television time was not enough for some candidates:

Thus, Taiwan’s Central Election Commission should also be allowed to expand the role of the official campaign forum. Under the current law, two presentations of one hour each would only allow a one hour forum with one rebroadcast. This leaves candidates with only fifteen minutes each. To increase the depth of discussion, the Legislative Yuan should require revise the POERL to allow candidates more time.

The official campaign forum would also allow candidates from smaller political parties an equal chance to interact with candidates from major political parties. Voters may not otherwise hear the views of candidates from smaller political parties. Although a small percentage of voters would actually vote for candidates from minority political parties, the presentation of minority views can inform and educate voters. By the same rationale, official election bulletins should also continue because they allow expression of minority political parties’ views. This would not allow an excessive number of candidates, because certain provisions in the POERL effectively limit the total number of candidates.

VI. Conclusion:

With the establishment of a new democracy, the next step in Taiwan’s political evolution is to improve its campaign finance laws. These new laws should try to prevent the quid pro quo sale of political favors. Taiwan’s Legislative Yuan could also use the new laws to promote egalitarian political participation. In debating possible revisions to the POERL, Taiwan’s Legislative Yuan should examine the historical development of campaign finance laws in the United States and Canada.

History suggests that contribution limits on nonprofit organizations are necessary because interest groups or PACs may develop to exploit the loopholes in the current contribution limits. A potential loophole the expenditure limits can be averted by defining expenditures broadly. Lifting the absolute ban on independent speech allowed greater political participation in Taiwan, it also allowed individuals to incur advertising expenditures on behalf of candidates. To eliminate this potential loophole, such expenditures should be regulated as contributions to the candidate. The POERL should allow Taiwan’s Central Election Commission to continue the tradition of official campaign forums and official election bulletins. The POERL should also subsidize candidates by providing public sponsored media time instead of reimbursements. The combination of these revisions would allow greater political participation by voters while preventing corruption in elections.

Although revisions in campaign finance laws seem small compared to proposed constitutional restructuring, campaign finance reform is still necessary. Campaign finance laws can never clean up politics, but revisions in the POERL can instill greater legitimacy and voter confidence in Taiwan’s fledgling democracy.