Taiwan Government Blocks Revenue Allocation Changes Amid Tensions

The Taiwanese government has blocked a significant amendment to its revenue allocation law, a decision that has raised concerns about fiscal stability and governance. According to sources, the Presidential Office and the Executive Yuan have opted for “no countersignature and no promulgation” on the amendment passed by the Legislative Yuan on November 14, 2023. This marks a historic first for the nation.

President William Lai is set to address the public on this matter, with details to follow on a news conference led by Premier Cho Jung-tai. The amendments aimed to increase the share of central government revenue allocated to local governments and introduced a minimum budget of project-based subsidies, which would elevate expenses by approximately NT$264.6 billion (US$8.48 billion).

The Executive Yuan has expressed that these amendments cannot be implemented without exceeding the statutory debt ceiling for the upcoming 2026 budget. Last month, the Cabinet requested that the Legislative Yuan revisit these amendments, but the opposition rejected this request by a vote of 59-50, opting to uphold the original legislation. Critics argue that Cho’s refusal is motivated by a desire to maintain central control over government revenues rather than facilitating local governance.

Cho indicated that the Executive Yuan might disregard the amendments, claiming he felt “under no pressure to execute” them due to perceived procedural flaws during their review. During a recent meeting of the Democratic Progressive Party (DPP), which included all 51 DPP lawmakers and Cabinet Secretary-General Xavier Chang, the caucus expressed full support for any measures the Cabinet might adopt in response to this situation.

DPP caucus chief Chung Chia-pin noted that with the Constitutional Court currently inactive, Lai has urged Cho to consider not countersigning the amendment, which would prevent the president from promulgating the legislation. The DPP lawmakers unanimously agreed to oppose what they perceive as potentially unconstitutional laws originating from the opposition.

Lai emphasized that these amendments, alongside the opposition’s blocking of a NT$1.25 trillion special defense budget, jeopardize national security, fiscal sustainability, and civil rights. He described the current situation as “grim” and stated it is essential for him to meet with the DPP legislative caucus to strategize a response.

In related developments, the Executive Yuan plans to adopt a similar “no countersignature and no promulgation” approach regarding amendments to the Civil Servants Retirement, Discharge and Pensions Act and the Public School Employee Retirement, Discharge and Pensions Act. These amendments, which were also passed by the Legislative Yuan, would suspend cuts to civil servants’ pensions and reverse fiscal reforms. Lai intends to invite Legislative Speaker Han Kuo-yu to a “National Affairs Tea Gathering” to discuss these issues, although Han has declined the invitation.

As Taiwan navigates these complex political dynamics, the implications of these decisions could significantly impact both local governance and national fiscal policies.