Amendments regulating the allocation of funding between central and local governments that passed the legislature on Friday would necessitate a complete reformulation of next year’s general budget, the Cabinet said.
Cabinet spokeswoman Michelle Lee (李慧芝) at a news conference yesterday said that if President William Lai (賴清德) acted in accordance with legislative convention by promulgating the updated Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法), the measures would go into effect within three days.
“Next year’s general budget will be severely impacted and may even need to be completely overhauled,” she said.
Photo: Wang Yi-sung, Taipei Times
The central government is “researching and discussing all constitutional remedy procedures” and “evaluating relevant response measures,” Lee said.
Lee was hinting at legal pathways for the central government to delay or avert implementation of the controversial package of amendments that changed — for the first time in 25 years — the balance of funding between the central and local governments.
The Cabinet can seek to reject a law passed by the legislature by requesting the lawmaking body reconsider it, or, once the law takes effect, bring it to the Constitutional Court for adjudication, a process that can take months. That move could be complicated by the fact that on Friday opposition lawmakers passed a legal change that requires more justices on the Constitutional Court to make a decision than are now in place due to retirements.
The central government is allocated 75 percent of funding, while local governments receive 25 percent.
In addition, local governments also receive additional general subsidies from the central government of NT$250.1 billion (US$7.65 billion), equivalent to about 6 percent of total government revenue, government figures show.
If put into effect, the law would allocate 40 percent to the central government and 60 percent to local governments — a massive decrease in the central government’s spending power — while also preventing the central government from reducing the amount of the general subsidies it gives to localities.
Speaking at the same news conference, Directorate-General of Budget, Accounting and Statistics Minister Chen Shu-tzu (陳淑姿) said that the updated law would impact centrally funded programs related to national defense, labor insurance, rent subsidies, social housing, policing, public construction and healthcare.
“It is unreasonable for the responsibilities of local governments to remain with the central government,” Chen said, adding that Friday’s amendments did not redistribute administrative duties to match the reallocated funding.
The government is to lose NT$375.3 billion, or 9 percent of total government revenue, if the law goes into effect, she said.
Defense spending would need to be cut by 28 percent, she said.
Lai on Saturday said that the nation’s combat capacity could be “deeply compromised” and that the amendments could undermine the “life safety” of 23 million Taiwanese.
Chen also said that since the amendments to the act did not specify an implementation date, they would go into effect three days after the president promulgates them.
This would lead to “procedural chaos” in relation to next year’s general budget, which is still under legislative review due to delays and disagreements between the ruling Democratic Progressive Party and lawmakers from the main opposition Chinese Nationalist Party (KMT) and the smaller Taiwan People’s Party, she said.
Additional reporting by Bloomberg
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