Central funding for cities, counties under review

By Su Yung-yao and Jake Chung  /  Staff reporter, withStaff writer

Tue, Jan 29, 2013 - Page 3

Legislators yesterday said that central government funding for local cities and counties should be raised to 20 percent, from the current 10 percent, of its total tax revenue.

According to Article 8 of the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法), the central government is to distribute to the cities and counties for their administrative use, 10 percent of its total revenue from income and commodity taxes, as well as 40 percent of the sales tax revenue after deducting funds allocated for the Uniform Invoice Lottery Prize money, as stipulated in Article 3 of the Regulations Governing Allotment of Central Government Tax Revenues (中央統籌分配稅款管理辦法).

The Democratic Progressive Party (DPP) and the legislature’s Legislative Research Bureau have proposed putting common subsidy payouts under the central government’s allotment of tax revenue funds to local governments, saying the subsidies and the funding overlap in some areas. They said that raising central government funding to 20 percent and placing general subsidies under this fund would simplify the system.

However, the draft amendments to the Act Governing the Allocation of Government Revenues and Expenditures are still pending legislative review and lawmakers have differing views on the matter.

According to caucus whips across party lines, it would be very difficult for the amendments to pass in the current legislative session, which reopens next month.

DPP caucus whip Ker Chien-ming (柯建銘) said the party still has some reservations about amending the act, adding that the amendments might just make poor counties even more poor.

Chinese Nationalist Party (KMT) Deputy Secretary-General Lai Shyh-bao (賴士葆) said it was difficult for the cities and counties to come to a consensus on how to better distribute the funds for their use.

People First Party (PFP) caucus whip Thomas Lee (李桐豪) said the problem with the Act Governing the Allocation of Government Revenues and Expenditures lies not with the legislature, but with the city and county governments.

Using babies needing milk as an analogy, Lee said that the five special municipalities — Taipei, New Taipei City (新北市), Greater Taichung, Greater Tainan, and Greater Kaohsiung — are all babies, while the Act Governing the Allocation of Government Revenues and Expenditures is the milk, and the Public Debt Act (公共債務法) their incubators, adding that the Act Governing the Allocation of Government Revenues and Expenditures should be amended prior to the Public Debt Act.

Meanwhile, after conducting an analysis of the management of public debt, the bureau has proposed that a warning system be implemented, saying such a system would be a reminder for both central and local governments of any potential debt crises.

The bureau also suggested that the Control Yuan or other oversight agencies should be authorized to keep an eye on the public debt for each city and county, adding that if the public debt was 10 percent shy of the debt ceiling, local governments should present plans to reduce their debt and also give a timeframe within which they hope to achieve this goal.

While amendments to the Public Debt Act, blocked by the PFP in the last legislative session, propose raising the ceiling of public debt for all cities and counties, Premier Sean Chen (陳冲) has also said that there must be a cap on debts.

However, the move has met with dissenting voices from officials of both special municipalities and other cities and counties, who say that without raising the ceiling and more funding from the central government, they would not have enough funds for administration.

Lai said that the parties had discussed amendments to the Public Debt Act and reached a general consensus on the issue. However, if the opposition parties still have problems with the proposed amendments, the KMT would not rule out calling for a vote on the issue.

Ker said that the DPP caucus hopes to raise the debt ceiling for poorer counties, adding that while the chance of the amendments being passed by the legislature is pretty high, the DPP does not wish to see it come down to a vote.

However, Lee said the current amendments lack any formal system of fiscal responsibility, adding that if this issue is not dealt with, there would still be problems with public debt in two or three years.