Four new special municipalities came into being on Saturday. This change was preceded by several county commissioners in predominantely agricultural areas complaining about a shortage of funds.
However, the pre-existing special municipalities — Taipei City and the former Kaohsiung City — were long favored over other counties and cities because of flaws in the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法) and the Public Debt Act (公債法). If this approach does not change, having five special municipalities will mean that the problematic differences between urban and rural areas will replace the wealth gap as the key issues between counties and cities.
Left unremedied, this situation will have a massive impact on Taiwan’s overall development.
The central government’s favored treatment of special municipalities has created big differences between urban and rural areas, in particular because the Act Governing the Allocation of Government Revenues and Expenditures exaggerates the situation.
In the past, Taipei and Kao-hsiung shared 47 percent of the central government’s allocations to local governments, while the remaining 53 percent was divided between 23 counties and cities.
That is why, for example, Taipei City had NT$15 billion (US$506 million) to spend on the Taipei International Flora Expo, while other counties and cities have to walk door to door with hat in hand to borrow money for salaries.
Now the five special municipalities will receive 71 percent of the government’s local government allocations, while the remaining 17 counties and cities will have to fight for a share of the rest.
This means that the areas that were not upgraded will be quickly demoted to second class, and the competition between them for fiscal resources will continue to intensify.
The Ministry of Finance has responded to the creation of the new municipalities by proposing an amendment to the Public Debt Act, but the amendment remains focused on the special municipalities.
The limit on their debt issue is set at 250 percent of their annual budget, almost three times more than the 70 percent allowance for each of the other counties and cities. Is this fair?
For example, New Taipei City (新北市, the proposed English name of the upgraded Taipei County) can issue NT$210 billion in debt, while Yilan, Yunlin, Chiayi and Pingtung counties are only allowed to issue NT$6 billion.
So the rich will become richer while the poor become poorer, and the poor counties never will be able to turn things around.
The rushed creation of the new municipalities was not designed based on an overall view of national land planning needs or the needs for a comprehensive redrawing of administrative districts.
It was based on political considerations that have failed to provide any solution to the many existing problems relating to local autonomy and has only created more questions.
The change does not reform government levels, administrative areas are not redrawn, the wealth differences between urban and rural areas have not been addressed, and no solutions have been provided to deal with the problems in the Act Governing the Allocation of Government Revenues and Expenditures and the Public Debt Act.
If the central government does not face these problems head-on and provide pragmatic solutions, a healthy local autonomy system will never see the light of day.
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