The Cabinet yesterday approved draft amendments to improve the fiscal situation of local governments in response to changes that will redraw administrative boundaries for five special municipalities and 17 counties and cities next year.
If the proposed amendment to the Law Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法) passes the legislature, each county or city, regardless of its status, will receive a bigger budget than it currently receives.
The amendment would expand the tax revenue centrally allotted to local governments by the central government, switch the right to levy land value-added tax from the central government to local governments, and increase the percentage that a county or city government receives of estate and gift taxes.
Also approved yesterday was an amendment to the Public Debt Act (公共債務法) to raise the debt ceiling of local governments.
The current limit for the public debt of a special municipality is 8 percent of the nation’s average gross national product over a three-year period.
The limit for county or city governments is currently less than 45 percent of its annual expenditure budget.
If the amendment passes the legislature, special municipalities will be allowed to take out loans worth less than 250 percent of their annual expenditure budget, while the ceiling for county and city government loans will be raised to 70 percent.
Meanwhile, the Cabinet also approved an amendment to the National Health Insurance Law (全民健康保險法) and an amendment to the Labor Insurance Regulations (勞工保險條例) to remove the requirement that local governments pay part of the premiums for their residents.
The Taipei City Government, Kaohsiung City Government and Taipei County Government, among others, have over a number of years accumulated varying levels of debt from grants for insurance premiums.
If the amendments pass the legislature, the part of insurance premiums that is shouldered by local governments will be shifted to the central government.
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