Cape Town - National Treasury's head of budget has told MPs that the department needs to consider the trade-offs required in order to increase party political funding from public revenue.Treasury deputy director-general Michael Sachs told legislators on Friday that the department would be hesitant to simply increase funding for parties and the Independent Electoral Commission (IEC) without more consultation."There is a large amount of money already in the political system from public sources," Sachs told the ad hoc committee looking into party funding."If we were to add money, either we borrow it, which doesn't make sense for a recurring cost; or we could raise taxes, which would crowd out space to raise taxes elsewhere; or we will have to cut budget somewhere else."The three options all have the potential for trade-offs, he said.Roughly R1bn is currently allocated to party funding, with just over R400m dedicated to Parliament and MPs for constituency work. The Represented Political Parties' Fund is allocated roughly R100m, and the provinces are allocated more than R500m. All distribution works on a 90% proportional allocation, and 10% equitable sharing between parties.However, provinces administer the distribution of the funds received themselves. Treasury audits how provinces manage their funds each year.Underfunding of crucial sectorsSachs said Treasury was not entirely against increasing funding for parties from public revenue, but that the department would first need to take into account where the public will lose out."Underfunding is widespread. There are many sectors in society that can justifiably complain that they are underfunded," he said.He said this included higher education, public health and basic education.MPs and parties need to deliberate more on what the priorities are, and assess whether all avenues in redistributing the existing R1bn have been exhausted.Ad hoc committee chairperson Vincent Smith joked afterwards that he used to like Sachs, but perhaps "not any more" after his presentation.MPs understood Treasury's wish to err on the side of caution on increasing the budget, Inkatha Freedom Party MP Narend Singh said. Economic Freedom Fighters MP Leigh-Ann Mathys said it was a "catch-22" situation for parties as some were already running low on funds, but would not want to take money away from key government services.Sachs again said there was enough money in the existing budget provided by public funds (citizens' taxes), to help Raise funds for the IEC.IEC needs money to enforce sanctionsThe electoral commission also presented on Friday.Acting chief electoral officer Sy Mamabolo said the IEC would need more funding not just for its existing roles, but also if Parliament decided to set up a new multi-party democracy fund.The two major considerations, among other things, are how the IEC could enforce sanctions and incentives if a new fund is set up.In order for parties to adhere to electoral rules in the Electoral Act, the IEC would need to be able to enforce warnings, fines, forfeitures, imprisonments and court applications, etc.Conversely, the IEC suggested donors could be incentivised through recognition and tax breaks for donating to political parties and declaring the donations.Freedom Front Plus MP Corné Mulder noted that a new fund would also need new rules and formulas according to which Treasury would allocate money.Sachs said the IEC's requested increase of R500 000 was not a lot, and could be found in the existing budget.The committee will return on September 14 to continue deliberations on the party funding model. On October 7 and 8, it will open up public hearings again for input from members of the public.Still on the agenda is for the committee to draft its ideas on full disclosure of private donors, and what threshold would be required to demand a disclosure. It will also deliberate on whether favours in kind from businesses, such as training donations, will be scrapped.