The passage of amendments to the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法) marks a milestone in the country’s financial governance. After 25 years of deliberation and discussion, that legislation is now able to reshape the distribution of resources between the central and local governments, boosting local fiscal autonomy and societal resilience without impacting national defense spending.
The amendment adjusts the revenue-sharing proportions between the central and local governments. The central government is currently allocated 75 percent of national tax revenues, leaving local governments with 25 percent. This imbalance has restricted local governments’ abilities to address financial challenges effectively.
Before the 1999 streamlining of provincial governments, the revenue ratio was 60 percent central to 40 percent local.
The new law redistributes an additional NT$370 billion (US$11.26 billion) to local governments, enabling more efficient governance and reducing the need for central government micromanagement. That empowers local governments to proactively address issues with tailored solutions, marking a return to a more balanced financial framework.
Contrary to claims of inadequate communication, the legislative process involved extensive discussions. From May to November last year, the act underwent five review sessions and two public hearings. A final cross-party negotiation on Nov. 11 concluded the process. This ensured the law reflects the needs and expectations of Taiwanese while addressing long-standing grievances. It is regrettable that some critics ignore the 25 years of debate, and the numerous hearings and negotiations held during this legislative session.
The central government’s budget management has faced scrutiny due to consistent tax revenue surpluses over the past four years, averaging more than NT$400 billion annually. Those surpluses, resulting from higher-than-expected tax collections rather than additional taxation, highlight a need for more dynamic and realistic budget forecasting.
Critics say that the overly conservative approach limits opportunities to expand the budget and invest in critical sectors. While the surpluses show fiscal stability, they also reveal the potential for more ambitious fiscal policies to support infrastructure, social services and resilience initiatives.
Despite fiscal stability, some policies raise concerns about long-term financial sustainability. Chief among these is the Democratic Progressive Party’s (DPP) energy policy, which includes moving away from nuclear power.
That decision has led to increased subsidies and NT$500 billion capital boosts for Taiwan Power Co (Taipower) over two years. Large-scale projects, such as the NT$882 billion Forward-looking Infrastructure Development Program and the NT$900 billion 2050 net zero emissions plan, have also sparked debates over their financial and regional impacts.
The redistribution gives local governments a more active role in governance. Increased local funding allows for region-specific policies without relying on centralized decisionmaking. Local governments would be able to allocate funds to improve emergency services, such as police, fire departments, hospitals and civil defense infrastructure.
Critiques of the central government’s civil defense efforts reveal significant shortcomings. Ministry of the Interior data show Taiwan has more than 105,000 evacuation facilities capable of sheltering 86.55 million people. However, many are simply parking lots or government buildings, with maintenance deprioritized in favor of recordkeeping.
Shifting resources to local governments fosters a decentralized and tailored approach to building social resilience, enabling community-specific solutions to strengthen emergency preparedness. That includes improving infrastructure, increasing budgets for civil defense and disaster relief-related agencies, and enhancing equipment for critical services. By addressing these, Taiwan can ensure its fiscal policies not only support financial stability, but also enhance citizen well-being and resilience.
Concerns about the law’s impact on defense budgets are unfounded. Major procurements, such as naval and air capability upgrades or the F-16V program, are typically handled through special budgets. Claims of a possible NT$80 billion impact on the defense budget reflect mismanagement and the conservative approach to increasing the central government budget rather than an actual lack of funds. The central government’s consistent tax surpluses provide ample room to reorganize spending and expand the overall budget.
Instead of resorting to fearmongering or blaming fiscal constraints, the government should address financial challenges and reorganize spending priorities. Irresponsible rhetoric undermines public confidence and distracts from genuine efforts to resolve fiscal issues.
The passage of the amendments represents a major step forward in addressing fiscal imbalances and empowering local governments. By reallocating resources, the law reflects the public will and provides a foundation for more balanced governance. The central government should avoid spreading fear, and instead focus on solutions to reorganize and rectify avoidable spending resulting from controversial policies.
Central and local governments must collaborate closely to maximize the benefits of the reform. That includes increasing budgets for critical services, enhancing civil defense infrastructure, and improving communication between the Ministry of the Interior and local governments.
Ultimately, the law’s success depends on its implementation and the ability of both levels of government to work together toward shared goals.
Wang Kai-chun is a foreign policy advisor for the office of Chinese Nationalist Party (KMT) Legislator Hsu Chiao-hsin.
As strategic tensions escalate across the vast Indo-Pacific region, Taiwan has emerged as more than a potential flashpoint. It is the fulcrum upon which the credibility of the evolving American-led strategy of integrated deterrence now rests. How the US and regional powers like Japan respond to Taiwan’s defense, and how credible the deterrent against Chinese aggression proves to be, will profoundly shape the Indo-Pacific security architecture for years to come. A successful defense of Taiwan through strengthened deterrence in the Indo-Pacific would enhance the credibility of the US-led alliance system and underpin America’s global preeminence, while a failure of integrated deterrence would
It is being said every second day: The ongoing recall campaign in Taiwan — where citizens are trying to collect enough signatures to trigger re-elections for a number of Chinese Nationalist Party (KMT) legislators — is orchestrated by the Democratic Progressive Party (DPP), or even President William Lai (賴清德) himself. The KMT makes the claim, and foreign media and analysts repeat it. However, they never show any proof — because there is not any. It is alarming how easily academics, journalists and experts toss around claims that amount to accusing a democratic government of conspiracy — without a shred of evidence. These
The Executive Yuan recently revised a page of its Web site on ethnic groups in Taiwan, replacing the term “Han” (漢族) with “the rest of the population.” The page, which was updated on March 24, describes the composition of Taiwan’s registered households as indigenous (2.5 percent), foreign origin (1.2 percent) and the rest of the population (96.2 percent). The change was picked up by a social media user and amplified by local media, sparking heated discussion over the weekend. The pan-blue and pro-China camp called it a politically motivated desinicization attempt to obscure the Han Chinese ethnicity of most Taiwanese.
On Wednesday last week, the Rossiyskaya Gazeta published an article by Chinese President Xi Jinping (習近平) asserting the People’s Republic of China’s (PRC) territorial claim over Taiwan effective 1945, predicated upon instruments such as the 1943 Cairo Declaration and the 1945 Potsdam Proclamation. The article further contended that this de jure and de facto status was subsequently reaffirmed by UN General Assembly Resolution 2758 of 1971. The Ministry of Foreign Affairs promptly issued a statement categorically repudiating these assertions. In addition to the reasons put forward by the ministry, I believe that China’s assertions are open to questions in international
RSS