Under the bill, political parties would be financed from three sources: from the state budget, with parliamentary parties being entitled to the amount of money in proportion to the number of seats they fill on the day of inauguration of the new parliament, from membership fees, and from donations in funds, commodities and services.
The government set a maximum donation limit of 90,000 kuna for natural persons and one million kuna for legal entities. All donations would have to be subject to a report by the State Audit Service which would be presented before the parliament. Anonymous donations, as well as donations by foreign countries, state bodies or public companies, would be banned. Any political party that fails to comply would face a fine of 500,000 kuna, while an individual authorised to represent a party would face a fine from 10,000 to 20,000 kuna.
During the government's session in Zagreb on Thursday, Prime Minister Ivo Sanader described the bill as an important step in efforts to counter corruption.
He added that the bill was drawn up in compliance with standards and practice of a majority of European countries.
The bill defines political parties as non-profit-making associations.
Also on Thursday, the government formally adopted a draft national population policy and sent the document into parliamentary procedure.
The Sanader cabinet also drew up a 2007 operation plan for the struggle against trafficking in human beings.
So far in 2006, Croatia has registered seven cases of human trafficking on its soil.