After forcing through a set of contentious legislative reforms last month, the Chinese Nationalist Party (KMT) and Taiwan People’s Party are pushing amendments to the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法), setting up a new battleground with the ruling Democratic Progressive Party (DPP).
The opposition parties said the amendments aim to increase the proportion of tax revenue allocated to local governments and help standardize how the funds are distributed. However, the DPP views the bills as an effort to chip away at the central government’s fiscal powers, which could weaken national finances and adversely affect national defense, social welfare and major infrastructure budgets.
The Ministry of Finance calculated that the central government would need to release an additional NT$577.7 billion (US$17.84 billion) to local governments a year under the KMT’s amendment. Coupled with general subsidies of NT$212.1 billion, tax revenue allocation of NT$422.7 billion and program-linked subsidies of NT$233.4 billion, the central government would need to provide local governments a total of NT$1.45 trillion a year, almost half of the central government’s total annual revenue, the ministry said.
The Act Governing the Allocation of Government Revenues and Expenditures was last amended in 1999, meaning it has not been updated in 25 years, even though the nation has gone through three peaceful transfers of power between rival parties, as well as changes in the political landscape of local counties and cities.
A fair and reasonable distribution of national revenue between different levels of government is a highly technical issue, financially and politically. With huge staff and administrative resources, the Executive Yuan has an advantage in drafting and designing fiscal amendments more carefully and thoughtfully than the Legislative Yuan, which has a relatively limited capacity for bill research. Indeed, the Executive Yuan presented several amendments to the act between 2002 and 2012 under various premiers, but those bills failed to pass legislative reviews.
The act has not been revised for a quarter century, because it has never been a simple financial issue. It is complex and political. The factors at play have included disagreements on fund allocation between special municipalities, cities, counties and the central government, power struggles between the central and local governments, and legislative committees stalling reviews due to elections.
Whether the central government has room to increase financial support for local governments depends on how much revenue it receives. The biggest issue the nation’s finances face is the ever-growing government expenditures, of which about 70 percent goes to wages and pensions for civil servants. Moreover, zero-sum competition between cities and counties has posed an insurmountable obstacle to mitigating the financial challenges local governments face.
The key to addressing the core problems of the amendments — such as how to make the distribution of tax revenue more fair and reasonable, how to push for fiscal autonomy for local governments along with higher fiscal discipline, and how to solve the imbalance of regional development without favoring specific counties and cities — depends on thorough discussion and negotiation among political parties to turn the zero-sum game into a win-win situation.
The ruling and opposition parties must find wisdom and vision while balancing their political considerations and financial skills to deal with resource allocation.
The opposition parties’ use of their combined legislative majority to undercut the central government’s fiscal power might not result in fair revenue distribution, but might instead waste financial resources, given a lack of discipline among local governments.
Trying to force a partnership between Taiwan Semiconductor Manufacturing Co (TSMC) and Intel Corp would be a wildly complex ordeal. Already, the reported request from the Trump administration for TSMC to take a controlling stake in Intel’s US factories is facing valid questions about feasibility from all sides. Washington would likely not support a foreign company operating Intel’s domestic factories, Reuters reported — just look at how that is going over in the steel sector. Meanwhile, many in Taiwan are concerned about the company being forced to transfer its bleeding-edge tech capabilities and give up its strategic advantage. This is especially
US President Donald Trump’s second administration has gotten off to a fast start with a blizzard of initiatives focused on domestic commitments made during his campaign. His tariff-based approach to re-ordering global trade in a manner more favorable to the United States appears to be in its infancy, but the significant scale and scope are undeniable. That said, while China looms largest on the list of national security challenges, to date we have heard little from the administration, bar the 10 percent tariffs directed at China, on specific priorities vis-a-vis China. The Congressional hearings for President Trump’s cabinet have, so far,
US political scientist Francis Fukuyama, during an interview with the UK’s Times Radio, reacted to US President Donald Trump’s overturning of decades of US foreign policy by saying that “the chance for serious instability is very great.” That is something of an understatement. Fukuyama said that Trump’s apparent moves to expand US territory and that he “seems to be actively siding with” authoritarian states is concerning, not just for Europe, but also for Taiwan. He said that “if I were China I would see this as a golden opportunity” to annex Taiwan, and that every European country needs to think
For years, the use of insecure smart home appliances and other Internet-connected devices has resulted in personal data leaks. Many smart devices require users’ location, contact details or access to cameras and microphones to set up, which expose people’s personal information, but are unnecessary to use the product. As a result, data breaches and security incidents continue to emerge worldwide through smartphone apps, smart speakers, TVs, air fryers and robot vacuums. Last week, another major data breach was added to the list: Mars Hydro, a Chinese company that makes Internet of Things (IoT) devices such as LED grow lights and the
RSS