Redistribution of tax fund to governments is uneven

By Cheng Chi-fang and Jake Chung  /  Staff reporter, with staff writer

Mon, Oct 21, 2013 - Page 3

Allocation of the tax redistribution fund for the next fiscal year suggests that uneven distribution of the fund among local governments still presents a challenge, with the five special municipalities plus Taoyuan County — which is slated to becomes the country’s sixth special municipality by the end of next year — receiving 64 percent of the funds, while the remaining 16 cities and counties receive the remaining 36 percent.

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 must 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).

Information released by the Ministry of Finance showed that the fund for next year totaled NT$207.8 billion (US$7.1 billion), only a slight increase of NT$435 million for this year. Of the fund, NT$188.2 billion would be distributed among 22 counties and cities while NT$19.6 billion would be distributed to all townships and villages across the nation.

Among the special municipalities, Taipei claimed the lion’s share with NT$34.3 billion, about NT$10 billion more than Greater Kaohsiung and New Taipei City (新北市).

On average, Taipei receives NT$13,000 per resident, almost twice the amount of residents of New Taipei City or other cities and counties, with the exception of Lienchiang County and Penghu County.

New Taipei City came in second with NT$24.8 billion, Greater Kaohsiung with NT$24.2 billion, Greater Taichung with NT$20.6 billion and Greater Tainan with NT$16.6 billion, the ministry report said. Taoyuan County received NT$12.2 billion, the report said.

When counting average distribution by population, Lienchiang County did best in the redistribution, with NT$26,000 for each of its 10,000 residents, with Penghu County, with a total population of 100,000 people, coming in second with NT$15,000 per resident, information from the ministry showed.

Changhua County came in last with NT$5,700 per person, Hsinchu County and Taoyuan County with NT$5,900 per resident, New Taipei City with NT$6,200 per resident and Yilan County with NT$6,300, the governmental information showed.

In response to criticism that the fund was unevenly distributed, officials with the National Treasury Administration said the financial subsidy from the central government to local governments was not limited to the tax redistribution fund, adding that there were other channels, such as ordinary subsidies and project subsidies.

These subsidies should also be taken into account, the officials said, adding that once the amendment to the Act Governing the Allocation of Government Revenues and Expenditures clears the legislature, the central government would be able to provide an additional NT$43.8 billion to help local governments.

However, the officials said that the draft amendment was still under discussion at the legislature’s Finance Committee, adding that though the committee had met five times in the past to discuss the amendments, differences on key issues had caused the draft amendment to remain mostly unchanged.

As the amendment was not prioritized during the current legislative session, it may be quite a while before the amendment is passed, the officials said.