Fri, Jan 07, 2011 - Page 3 News List

Central government refuses to take over municipality debts

By Shih Hsiu-chuan and Mo Yan-chih  /  Staff Reporters

Premier Wu Den-yih (吳敦義) yesterday rejected a proposal that the central government should assume all debts incurred before the four special municipalities came into being.

Greater Kaohsiung Deputy Mayor Liu Shih-fang (劉世芳) made the suggestion at the weekly Cabinet meeting yesterday. According to an official attending the meeting who wished to remain anonymous, Greater Tainan Mayor William Lai (賴清德) seconded Liu’s suggestion, followed by Greater Taichung Mayor Jason Hu (胡志強), who first raised the idea a few days ago.

Local finances have become a major concern after four special municipalities came into being on Dec. 25 last year.

The government plans to amend the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法) and increase the budget allocated to the five municipalities from 43 percent to 61 percent.

Heads of other local governments, including Yunlin, Yilan and Chiayi counties, have expressed concern that their counties’ finances will suffer as a result of the bill.

Rejecting Liu’s proposal, the premier was quoted by Executive Yuan Spokesman Johnny Chiang (江啟臣) as saying: “Fund shortages are not a problem unique to the five special municipalities, but a problem faced by governments at all levels.”

According to the same official, Lai asked for an additional grant from the central government, noting that Greater Tainan faced a shortage of up to NT$12 billion (US$409.4 million) in funds in the run-up to the Lunar New Year to cover expenses in project payments, year-end bonuses and salaries for government employees.

Lai also expressed dissatisfaction over the central government agreeing to cover the National Health Insurance premiums owed by Taipei City and the previous Kaohsiung City governments to the Bureau of National Health Insurance, according to the official. Lai demanded that the central government appropriate funds for the special municipalities to pay their shares of premiums accrued from the farmers’ insurance program.

Meanwhile, Taipei Mayor Hau Lung-bin (郝龍斌) urged the central government to pay more attention to the financial health of local governments and establish a mechanism to encourage local governments to increase tax revenue.

Commenting on Liu’s suggestion that the central government should take over all debt prior to the merger, Hau said: “Local governments should not ask the central government to shoulder all of their financial burdens, but the central government should establish a mechanism to reward those local governments that come up with ways to increase city revenue without depending on subsidies from the central government.”

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