The KMT yesterday identified what it called "deficiencies" in Executive Yuan-proposed amendments to the Law Governing the Allocation of Government Revenues and Expenditures, saying its legislators would correct them when the bill is reviewed by the legislature.
KMT-proposed amendments to the bill were passed in January, but were overturned by the legislature in February at the request of the Executive Yuan.
KMT Chairman Lien Chan (連戰) said that although the KMT's effort to amend the law was unsuccessful, it has prompted the Executive Yuan to take the financial problems of local governments seriously.
"Progress has been seen in these draft amendments, but there are still five obvious deficiencies," Lien said.
The KMT chairman made the remarks at a meeting of the party's Central Standing Committee, at which an analysis of the Executive Yuan-proposed bill was presented.
First of all, the bill, under which all business tax and alcohol and tobacco tax revenue would be earmarked for the tax redistribution fund, has violated the spirit of "co-sharing taxes," Lien said.
Second, by transferring 10 percent of income tax and commodity tax revenue to the ordinary subsidy fund, instead of the tax redistribution fund, the bill has gone against the principle that the central government is supposed to handle the revenues and expenditures collectively, Lien said.
Third, while the bill would create an advisory board to offer suggestions on the allocation of the funds, these suggestions would be non-legally binding and would serve no practical function, Lien said.
Fourth, the bill lacks an objective standard by which to measure local governments' basic financial demands, which would tempt local governments into increasing their spending and decreasing their income as a means to expand their financial demands, according to Lien.
Last, he added, the bill indicates the lack of trust between the central and local governments and the lack of responsibility in the central government.
To correct these deficiencies, the KMT suggested earmarking 50 percent of the business tax and 80 percent of the alcohol and tobacco tax and the commodity tax for the tax redistribution fund, while avoiding setting a minimum percentage for the taxes to be earmarked for the ordinary subsidy fund.
Also, the KMT proposed that the Executive Yuan review the formula for the allocation of the tax funds every three years and detail a proper spending scale for each local government.
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