The China Post staff
While the central government is faced with mounting debts, three of the richest local governments are also feeling the financial pinch, threatening a fight over the dwindling fund pool for the various government bodies. The Executive Yuan (Cabinet) held on Monday a coordinating meeting on the draft revisions on the formula of allocating funds to different governments but no conclusions were reached due to standoff of officials representing the governments. The two special municipalities of Taipei and Kaohsiung cities now enjoy a combined 43 percent of the total fund allocation handed out by the central government. Officials from Kaohsiung City Government repeated their past demands for a higher share of the funds allocated by the central government to local governments. Of the total 43 percent earmarked for the two largest cities in Taiwan, they said, Taipei City Government now takes the lion’s share of 73.55 percent while Kaohsiung gets a minor cut of only 26.45 percent. They said that many enterprises set up their polluting plants in Kaohsiung but pay their business tax and business income tax — main source of the allocation fund — in Taipei because their corporate headquarters are located there. They said it is not fair for Kaohsiung residents to suffer the pollution while people in Taipei get most of the pool money. It also shows the serious imbalance in the central government’s treatment of the two special municipalities by favoring people in the north of the island over those in the south. Officials from Taipei County Government complained that it is not fair for Taipei and Kaohsiung cities to take about 43 percent of the total fund allocation while all other 21 city and county governments share the other 57 percent. They suggested that the central government slash the ratio for the two major cities to 20 percent and distribute the other 23 percent to all other local-level governments. However, Taipei City officials refused to give in. They protested that while residents of the city contributed 40 percent of national tax revenues, they actually have only an 8.56 percent cut of the country’s expenditure. This indicates that people of the city has already generously shared the tax income with all people around Taiwan. They said of the NT$49.2 billion allocation fund from the Cabinet, Taipei City has a share of 12 percent nationwide, about the same ratio of Taipei’s population in Taiwan. While the Cabinet gives NT$230 billion subsidies to local governments each year, Taipei does not get a single dollar. Taipei Deputy Mayor Ou Chin-der said the city will not give any concession on the issue. Lee Shu-teh, director of the Finance Bureau, said Taipei City has become a major victim of the prolonged economic downturn. Its debts are expected to increase to NT$160 billion, the maximum amount the city government is allowed to raise, by the end of the year. At the same time, the city already lost NT$13 billion in tax revenues due to slower economic activities while the central government’s tax-cutting measures caused an additional revenue loss of NT$17.7 billion in the past three years. Under the financial squeeze, Lee’s bureau has started twisting the arms of various departments to step up collection of administration fines owed by people and companies to the city government. For the first half of the year, NT$1.7 billion of the over NT$2.2 billion fines had been collected. About NT$1.5 billion of the total came from violators of traffic regulations.