Defense spending is to reach 3.32 percent of GDP next year, Premier Cho Jung-tai (卓榮泰) said yesterday, adding that the planned budget increase underscores the nation’s commitment to safeguarding national security.
The proposed defense spending for the next fiscal year, which includes expenditures for veteran affairs and the coast guard, is to reach NT$949.5 billion (US$31.13 billion), or 3.32 percent of GDP, Cho told a Cabinet news briefing in Taipei, adding that the new calculation method followed NATO standards.
“We are demonstrating to the world and to our own people our determination and capability to safeguard national sovereignty and security,” Cho said.
The proposal, which still requires legislative approval, represents an increase of NT$176.8 billion, or 22.9 percent year-on-year, Ministry of National Defense Comptroller Bureau head Hsieh Chi-hsien (謝其賢) said.
Even without taking into account veteran and coast guard expenses, the proposed budget for the ministry alone is to increase by NT$93.8 billion, 20.1 percent higher than this year.
The ministry said that military investment spending is to increase by NT$23.2 billion, or 16.76 percent, to NT$161.6 billion due to payments for arms purchased from the US.
In response to the “growing threat from adversaries,” expenditure on operational upkeep is also set to rise by 34.82 percent to NT$199 billion, mainly to cover the cost of additional ammunition and spare parts, the ministry said.
Personnel costs, estimated at NT$200.8 billion, would remain the largest component of the ministry’s budget for next year.
Hsieh said special budget spending would be about NT$186.8 billion, which includes NT$76.8 billion for the confirmed purchase of aircraft and other defense articles, as well as coast guard system upgrades.
He declined to provide details on the breakdown of the remaining NT$110 billion, saying only that the amount includes additional arms purchases pledged by President William Lai (賴清德) in February.
The proposal to procure additional arms was submitted to the Cabinet for review on Aug. 8, Hsieh said, adding that he was unable to provide further information while the review was underway.
Calls for Taiwan to raise defense spending above at least 3 percent of GDP have grown amid rising military pressure from China. Under the Democratic Progressive Party government, defense spending has hovered between 2 percent and 2.5 percent over the past nine years.
The last time Taiwan’s defense spending exceeded 3 percent of GDP was in 2009, during the administration of former president Ma Ying-jeou (馬英九) of the Chinese Nationalist Party (KMT).
Lai in February said his administration would aim to ensure Taiwan’s defense budget exceeds 3 percent of GDP “to demonstrate our resolve for national defense.”
The president’s comments were made in light of US President Donald Trump’s repeated calls during his presidential campaign and after his re-election for Taiwan to increase military spending.
Cho said that overall, next year’s total government revenues are expected to reach NT$2.862 trillion, a decrease of about 9.6 percent, or NT$302.5 billion, compared with this year’s NT$3.16 trillion.
Expenditures are to increase by NT$110 billion to NT$3.035 trillion, an rise of about 3.8 percent, he said.
The central government would be in a fiscal deficit due to new budget regulations, as it is required to provide local governments with NT$416.5 billion, Cho said.
After taking into account the central government budget and special budgets, the overall deficit would be NT$400 billion, he said.
Even with the budget cuts, the government has many responsibilities, including defense spending, funding health and welfare, long-term care for seniors and new artificial intelligence (AI) initiatives, Cho added.
Cho also called for bipartisan discussions to reach a consensus on questions about the budget.
Other than military spending, public infrastructure expenditure — including flood control projects, provincial expressway improvements and the construction of AI computing data center — is set to rise by NT$93 billion, or 16.1 percent from last year, to NT$670.4 billion, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said.
The government would allocate NT$203.1 billion for technology development — up 15.1 percent from this year — to fund basic research, and research and development of drones, robotics and low Earth orbit satellites.
An additional NT$299.3 billion has been earmarked for public development projects, including an underground railway line in Taoyuan, seawater desalination plants in Tainan and Hsinchu County, and the Southern Taiwan Science Park.
The government also plans to pump NT$120 billion into the Labor Insurance Fund and NT$20 billion into the National Health Insurance system, DGBAS official Hsu Yung-i (許永議) said.
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