Stefánsson questions state funding of political parties

Political parties should not become financially dependent on the state, Gísli Stefánsson argues in an opinion article published by Morgunblaðið. The 2027 budget proposal continues to allocate hundreds of millions of krónur from the Treasury to party operations, he writes.

Public funding was introduced partly to limit the influence of wealthy individuals and companies and to promote equality, transparency and trust in political activity. These are valid aims, Stefánsson says, but the system should not be exempt from criticism.

Under current law, a party can qualify for annual state operating grants if it receives at least 2.5 per cent of the national vote, provided it meets other requirements. It does not need to win a seat in parliament. The Socialist Party of Iceland has received substantial state funding without electing an MP, Stefánsson notes.

He also points to flaws in allocations to the People’s Party that came to light in 2025, linked to a failure to complete legally required registration. Rules for public funding must be enforced, he argues.

While state grants to parties have been adjusted in line with price and wage developments, the maximum donation from an individual or company has remained at 550,000 krónur since 2019. Stefánsson says the value of that amount has fallen considerably, leaving the public with less scope to support political activity while state funding is regularly revised.

In his view, guaranteed public funding has weakened parties’ incentive to seek support from the public and mobilise members. He argues that as parties rely less on donations and grassroots activity, they may become increasingly dependent on the state, and political forces may become established without building strong membership organisations.

Stefánsson says any review of state grants must preserve transparency, so the public can see who funds political activity and how much they contribute. He questions whether efforts to curb the influence of individual donors have instead created another form of financial dependence, calling it a paradox that parties meant to hold the state to account rely on it for their funding.

Gísli Stefánsson is an alternate member of parliament for the Independence Party in the South Constituency.