The Miaoli County Government’s budget is not very large, so it is surprising that the county is NT$64.8 billion (US$2.1 billion) in debt and unable to pay its civil servants.
The long-term deterioration of the local fiscal situation is a result of systemic factors. One factor is the central government’s centralization of funds. Another factor is the lack of fiscal discipline, and the inability to increase revenue and reduce expenditure.
Before the Taiwan Province administration was frozen in 1998, the provincial Department of Finance conducted strict reviews of local government budget plans, and adopted an evaluation system after budget implementation. Unfortunately, the system was not completely transferred to the Ministry of Finance. Considering Miaoli’s financial difficulties, the ministry should improve monitoring and control of local government finances to prevent the situation from deteriorating further.
As for non-systemic factors, fiscal deterioration often occurs when a mayor or commissioner has a fondness for the grandiose. According to US economist William Niskanen, bureaucrats seek to increase their budgets by using their power for personal gain. Local government heads, top officials and county councilors are all politicians, and they seek to increase budgets and staff for their own units. Although they know the local government is in debt, they raise debt to maximize their financial clout. As human weakness is like a runaway horse, local government debt surges.
Before a bailout, the ministry should demand that the Miaoli County Government propose a feasible plan to increase revenue and reduce expenditure, and that local civil servants work together at this difficult time and are treated as accomplices in the bankruptcy. The Miaoli County commissioner, top county officials and county councilors should be prepared for salary cuts. Are they aware that New York City officials cut their salaries in the 1970s to resolve a fiscal crisis?
Even if officials only have their monthly salaries cut by NT$5,000, that would signal their determination to stop increasing their power by expanding the budget, thus warning related units not to make slack budgets. This could also fix financial loopholes and lower opposition if Miaoli wants to broaden the sources of revenue by increasing taxes and fees.
The central government has provided a legal basis for local governments to broaden their revenue sources, although local government heads seldom employ them in order to attract votes. This is proven by the fact that local government finances have not improved since the Act Governing Local Tax Regulations (地方稅法通則) was implemented in 2002. The Miaoli County Government should have used the act to boost revenue and clear debt. The easiest way is to levy surtaxes on the central government’s income tax or the county government’s land value and house taxes.
Miaoli can refer to my 2001 book, Let’s Go to Taoyuan, in relation to the county’s fiscal reform. Taoyuan’s financial shortage stood at NT$16.5 billion in 1999, and in the budgets for the second half of 1999 and all of 2000, during my term as Department of Finance director, we cleared part of the old debt without taking on new debt.
Fiscal reform is a long and painful task. It is long because communication of concepts is time-consuming, and it is painful because it inevitably offends vested interests of an unreasonable existing system, causing conflict. However, if the Miaoli County Government can show unselfish concern for its civil servants and for residents’ welfare, and move forward courageously, it will succeed.
Tsai Chi-yuan is a former director of Taoyuan’s Department of Finance.
Translated by Eddy Chang
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
In an article published on this page on Tuesday, Kaohsiung-based journalist Julien Oeuillet wrote that “legions of people worldwide would care if a disaster occurred in South Korea or Japan, but the same people would not bat an eyelid if Taiwan disappeared.” That is quite a statement. We are constantly reading about the importance of Taiwan Semiconductor Manufacturing Co (TSMC), hailed in Taiwan as the nation’s “silicon shield” protecting it from hostile foreign forces such as the Chinese Communist Party (CCP), and so crucial to the global supply chain for semiconductors that its loss would cost the global economy US$1
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
Sasha B. Chhabra’s column (“Michelle Yeoh should no longer be welcome,” March 26, page 8) lamented an Instagram post by renowned actress Michelle Yeoh (楊紫瓊) about her recent visit to “Taipei, China.” It is Chhabra’s opinion that, in response to parroting Beijing’s propaganda about the status of Taiwan, Yeoh should be banned from entering this nation and her films cut off from funding by government-backed agencies, as well as disqualified from competing in the Golden Horse Awards. She and other celebrities, he wrote, must be made to understand “that there are consequences for their actions if they become political pawns of