The Directorate General of Budget, Accounting and Statistics (DGBAS) yesterday unveiled its proposed amendments to the Law Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法) aimed at "decentralizing both money and power."
To smooth the amendments' passage, DGBAS Director General Lin Chuan (林全) and Executive Yuan Secretary-General Lee Ying-yuan (李應元) visited lawmakers to brief them on the proposals and seek their support.
Lin assured lawmakers that the financial resources and autonomy enjoyed by local governments would increase after the amendments are passed.
According to the proposed amendments, the portion of tax revenue for townships would be appropriated to county and city governments, which would then be responsible for allocating funds to the townships under their jurisdiction.
A distribution formula would be adopted to replace the current system, in which the tax-based funding is allocated to each level of local government according to fixed percentages.
To increase the total funding available for local governments, the Executive Yuan is planning to earmark all revenue from the business tax and a certain percentage of the revenue from the commodity tax and alcohol and tobacco taxes.
Currently, the funding is apportioned by the central government directly to townships, counties and cities, and the special municipalities of Taipei and Kaohsiung in the amounts of 12 percent, 39 percent and 43 percent, respectively. The remaining 6 percent is retained by the central government as an emergency reserve.
The Executive Yuan reviews the financial conditions of each level of government and may revise the law to adjust the percentages each year.
Disputes over the distribution of the tax funds have occurred almost every year as each level of local government has fought for a larger share of the pie.
The Executive Yuan's plan to further cut the allocation ratio for the municipalities of Taipei and Kaohsiung triggered strong protest from Taipei Mayor Ma Ying-jeou (馬英九) earlier this year.
KMT and PFP lawmakers threw their weight behind Ma and joined forces to amend the allocation law in January to increase the tax redistribution fund.
But the amendments were overturned in February, after the Executive Yuan requested that the legislature reconsider them.
The Cabinet then promised that it would submit its own proposed amendments to the legislature within three months.
Lin Yi-shih (林益世), the KMT legislative caucus whip, said that the DPP should take responsibility to ame nd the law, as the KMT-proposed amendments had been overturned.
Lin Yi-shih said the proposal unveiled by DGBAS yesterday was mainly designed to readjust the shares of tax revenue to be kept by central and local governments, which did not necessarily mean an increase of financial autonomy enjoyed by local governments.
While increasing the tax-based funding for local governments, the Executive Yuan should promise not to cut its subsidies for local development and social welfare projects, Lin suggested.
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