Chinese Nationalist Party (KMT) lawmakers yesterday urged the government to proceed cautiously with a plan to increase the debt ceilings of the central and local governments.
KMT Legislator Lai Shyh-bao (賴士葆) said such a move could lead to excessive government indebtedness and pass a huge debt burden to future generations.
In line with the creation of new special municipalities at the end of this year, the Cabinet has been seeking to amend the Public Debt Act (公共債務法) and the Act Governing the Allocation for Government Revenues and Expenditures (財政收支劃分法) to change the calculation methods for local government debt ceilings.
The two bills are among a number of pieces of priority legislation that the Cabinet hopes the Legislative Yuan will deal with in a special session that is likely to be held during its current summer recess.
Under the Ministry of Finance’s (MOF) proposal, the debt ceiling for special municipalities would be changed from 5.4 percent of the average nominal GNP for the past three years to 250 percent of their annual expenditure.
The MOF reportedly also intends to raise the overall ceiling for debt at all levels of government from 48 percent of GNP to 52 percent or even 54 percent of GNP.
KMT Legislator Alex Fai (費鴻泰) suggested that revenue, rather than expenditure, should be used as the basis for calculating local governments’ debt ceiling to prevent their finances from worsening further.
Local governments should also pay a higher percentage of the principal every year when they service their debts, he said.
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