From Academic Kids
In party-list proportional representation systems, an election threshold is a clause that stipulates that a party must receive a minimum percentage of votes, either nationally or within a particular district, to get any seats in the parliament. The effect of the threshold is to eliminate small parties, or force them into coalitions. Many people hold that this makes an election system more stable by keeping out radical factions.
In Poland's Sejm and Germany's Bundestag (elected through the Additional member system), this threshold is 5% (or 3 constituency seats in Bundestag, but directly won constituencies are kept regardlessly), while it's 1.5% in Israel's Knesset (it was 1% before 1992), and 10% in the Turkish parliament. In Poland, the minorities do not have to reach the threshold level to get into the parliament, and so there are 2 MP from German Minority in the Sejm.
Countries can have more than one threshold. For example, Germany, as mentioned earlier, has a "regular" threshold of 5%, but if 3 constituency seats are won in the Bundestag, the party can get additional representation with less than 5% of the vote. Most multiple-thresholds are still in the proposal stage. For example, in Canada, one proposal to reform the electoral system would see a 5% national threshold, 1% of the vote and 1 seat in the house of commons, or 2% nationally and 15% of the vote in any one province.
Despite arguments about bringing stability to the political system, electoral thresholds can grossly skew the overall political picture without any beneficial effect. A striking example is Turkey. The 10% threshold in Turkey was established mainly to prevent multi-party coalitions and put an hold the endless fragmentation of political parties as seen in '60s and '70s. Yet successive electoral results since its inception in 1983 suggested otherwise; coalitions ruled between 1991 and 2002, mainstream parties continued to be fragmented and as a serious side effect, the 2002 elections caused 45% of the votes casted for below-threshold parties to be unrepresented in the parliament.