The Executive Yuan yesterday approved its version of draft amendments that would raise funds for local governments to a record high of NT$1.2 trillion (US$38.34 billion) next year.
The Cabinet’s amendments to the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法) would increase the total amount of centrally allocated tax revenue, general subsidies and project-based subsidies, Executive Yuan Secretary-General Xavier Chang (張惇涵) told a news conference.
Allocations to the six special municipalities — Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung — would rise by 15 percent, while allocations to the 16 other local governments would increase by 25 percent, Chang said.
Photo: Lo Pei-de, Taipei Times
The Cabinet’s version balances the distribution of funds to ensure that central and local governments have a closer relationship and a more reasonable financial distribution, he said.
It also considered local agricultural production, tobacco and alcohol tax rates and pollution in formulating the amendments, he added.
However, the draft bill faces dim prospects in the opposition-controlled legislature, which passed its own revisions to the act on Friday last week.
The Chinese Nationalist Party (KMT) caucus in a statement said that the Cabinet’s version is not in line with public opinion and that the Executive Yuan should review the newly amended act before proposing another version.
The Taiwan People’s Party (TPP) caucus said that Premier Cho Jung-tai (卓榮泰) might be derelict in his duties for failing to draft a budget in accordance with the version passed by the legislature.
The current act, amended by the legislature in December last year, has been criticized for uneven urban-rural distribution and a flawed formula.
Amended Article 16-1 mistakenly stated that the calculations for centrally funded tax revenue would be based on “all 22 cities and counties” instead of “the 19 cities and counties on Taiwan proper,” resulting in 0.2 percent of funds being unable to be distributed for municipalities on Taiwan, and 99.8 percent of funds being unable to be distributed to outlying islands.
The total amount of funding that cannot be distributed stands at NT$34.5 billion, the Cabinet said previously.
Paragraph 3, Article 30 also states that general subsidies from the central to local governments should not be less than the total of the previous year.
However, the interpretation of the central government — which said that the total amount would remain unchanged, but the amount allotted to individual municipalities could vary — was at odds with that of local government heads, who said that funding to each municipality should not be less than the previous year.
The Ministry of Finance yesterday said that the Cabinet’s draft aims to achieve five major goals: more balanced quality of life for citizens, fairer urban-rural distribution, stronger central-local government partnerships, more reasonable distribution across financial and administrative expenses, and strengthened local autonomy.
Central government subsidies for local governments include shared tax revenue and grants, with the total amount to at least match this year’s figure, the bill says.
Shared tax revenue next year would total NT$821.3 billion, a NT$353.7 billion increase from this fiscal year, the draft says.
The increase would negate the need for additional “augmentation funds” within general grants, although NT$108 billion in funding would be returned to local governments for administrative functions, it said.
Shared tax revenue would first be used to cover local governments’ fiscal shortfalls, ensuring that essential expenditures are met and that all local governments start from an equal fiscal baseline, the ministry said.
Of the NT$250.1 billion to be used for general grants, NT$142.1 billion would be reserved for education, social welfare and basic infrastructure, while the remaining NT$108 billion would be included in basic fiscal needs first covered by shared tax revenues, it said.
The draft amendments include a formula to ensure fair distribution across the 22 municipalities, incorporating factors such as population structure, land management and pollution-control costs to balance urban-rural and agricultural-industrial needs, and regional development, it said.
As for project-based grants to improve quality of life and support major public infrastructure, such as rail projects, they would remain at NT$236.8 billion, after the expiration of phase five of the Forward-looking Infrastructure Development Plan this year, it added.
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