Cabinet warns allocation amendments entail 'complete overhaul' of budget

Taipei, Dec. 23 (CNA) Amendments regulating the allocation of funding between central and local governments passed following a mass hourslong brawl inside the Legislature Friday would necessitate a complete reformulation of next year's general budget, according to Taiwan's central government.

Cabinet spokesperson Michelle Lee (李慧芝) told reporters at a news conference on Monday that if President Lai Ching-te (賴清德) acted in accordance with legislative convention by promulgating the updated Act Governing the Allocation of Government Revenues and Expenditures, then the measures would go into effect within three days.

"Next year's general budget will be severely impacted and may even need to be completely overhauled," the Cabinet spokesperson said.

Lee told reporters that the central government was "currently researching and discussing all constitutional remedy procedures" and "evaluating relevant response measures."

The spokesperson was hinting at legal pathways for the central government to delay or avert implementation of the controversial package of amendments that changed -- for the first time in 25 years -- the balance of funding between the central and local government.

Currently, the central government is allocated 75 percent of available funding, while local governments receive 25 percent.

In addition, local governments also receive additional general subsidies from the central government of NT$250.1 billion (US$7.7 billion), equivalent to around 6 percent of total government revenue, according to government figures.

If put into effect, the law would allocate 40 percent to the central government and 60 percent to local authorities -- a massive decrease in the central government's spending power -- while also preventing the central government from reducing the amount of the general subsidies it currently gives to localities.

Speaking at Monday's news conference, Directorate-General of Budget, Accounting and Statistics Minister Chen Shu-tzu (陳淑姿) warned that the updated law would impact centrally-funded programs such as national defense, labor insurance, rent subsidies, social housing, policing, public construction and healthcare.

"It is unreasonable for the responsibilities of local governments to remain with the central government," Chen said, noting that Friday's amendments did not redistribute administrative duties to match the reallocated funding.

The minister said that the government is set to lose NT$375.3 billion (US$11.49 billion), or 9 percent of total government revenue, if the law goes into effect.

Defense spending, for instance, would need to be cut by 28 percent, the minister warned.

Chen also emphasized that, since the amendments to the Act Governing the Allocation of Government Revenues and Expenditures did not specify an implementation date, they would go into effect three days after Taiwan's president promulgates them.

This would lead, the minister said, to "procedural chaos" in relation to the 2025 general budget, which is still under legislative review due to delays and disagreements between the ruling Democratic Progressive Party (DPP) and lawmakers from the main opposition Kuomintang (KMT) and the smaller Taiwan People's Party (TPP).

DPP lawmakers broke into the Legislative Yuan building the night before Friday's vote in an attempt to halt proceedings by occupying the speaker's podium.

The next morning brought farcical scenes as KMT and TPP lawmakers tussled en masse with their DPP counterparts to force their way into the building.

After several hours of scuffles, opposition lawmakers broke through a series of makeshift barricades to wrestle back control of the podium and call a vote.

Meanwhile, as chaos reigned inside the Legislature, thousands rallied on the streets outside the building to protest the amendments' passage.

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