A consultation session among political party caucuses late last week decided that the legislative session, which typically begins on Sept. 1, would begin on Friday.
Over the past two weeks, controversies over the allocation of government revenue and expenditures have sparked accusations between the central and local governments, as well as between the ruling and opposition parties, and are expected to be one of the priority bills discussed in the new session.
After the Ministry of Finance on Aug. 29 informed local governments about the “centrally funded tax revenue” they would receive for next year — calculated based on an amendment to the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法) passed by the legislature in December last year — many local governments were unsatisfied.
Fifteen local government heads from the opposition Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP) gathered in Taipei on Wednesday, demanding that the central government promise them that the funds allocated for local governments would “only increase” year by year.
Ironically, the amendment was proposed by the KMT and rushed through by opposition lawmakers within minutes without proper discussion last year.
The Executive Yuan pointed out flaws in the amendment and asked the legislature to reconsider it, but opposition lawmakers rashly rejected the proposal.
The main issue is a flawed formula for determining the “centrally funded tax revenue” for each local government, which led to a non-distributable NT$34.5 billion (US$1.14 billion) that was also unusable by the central government.
Other controversies include that although the amendment stipulates that the number of general grants cannot be less than the previous year, it did not define whether it was referring to the total number or the number for each local government. The Cabinet revised the items eligible for general grants, but local governments were concerned that they would need to apply and be reviewed for future grants.
The total amount of “centrally funded tax revenue” allocated to local governments next year is to increase by more than NT$400 billion, but several local governments are still unsatisfied due to the perceived “unfairness” of distribution based on the flawed formula, particularly counties on outlying islands and in southern Taiwan, as well as concerns about possible reductions in general and program grants.
The Cabinet said that the legislature had refused to reconsider the flawed amendment, resulting in the non-distributable fund and greater urban-rural divide, adding that as local governments receive more funds, their duties and responsibilities should increase accordingly.
However, the KMT refused to apologize for its mistake, saying that the “small flaw” in the formula could be quickly corrected when the new legislative session starts. It instead accused the Executive Yuan of administrative negligence and creating conflict, and called the Democratic Progressive Party a “big baby.”
Premier Cho Jung-tai (卓榮泰) on Saturday invited local government heads to discuss the issues, but the legislature and the Cabinet maintained their stances, pointing fingers at each other.
The Cabinet would conduct a comprehensive assessment of the amended law to address the urban-rural inequality problem, he said, but asked the legislature to bear responsibility for its mistake.
Whether the legislature and the Cabinet could come together to work out an acceptable solution for both sides remains to be seen.
Some academics said that revising the formula would be easy with the KMT-TPP majority in the legislature, but the transfer of central government duties and responsibilities to local governments in accordance with increased funding might be challenging.
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