Lai warns revenue-sharing amendment would cripple Taiwan's finances

Taipei, Dec. 16 (CNA) The government's finances would be hurt by a recent amendment pushed through by opposition parties that increases public funds allocated to local governments, President Lai Ching-te (賴清德) said Monday as the stalemate over the issue persisted.

Premier Cho Jung-tai (卓榮泰) has refused to sign off on the law and Lai has not formally put it into effect, the first time a president of the Republic of China (Taiwan's formal name) has not publicly put into effect a bill passed by the Legislative Yuan.

The two have argued that the amendment violates the Constitution and would hurt Taiwan's public finances.

In a pre-recorded video posted Monday night, Lai said that as president, he is duty-bound to safeguard Taiwan's democratic system according to the Constitution, and to ensure the survival and development of every citizen.

"Given the current constitutional circumstances, I must clearly explain to the people the risks we're facing," Lai said in the video, made after he met with Cho and Examination Yuan President Chou Hung-hsien (周弘憲) to discuss the issue.

The amendment, passed in November, would see local governments receive more funding at the expense of stymieing major central government policies, Lai said.

It would force the central government to borrow NT$563.8 billion (US$17.9 billion) during the 2026 fiscal year, exceeding the statutory deficit ceiling -- a violation of the Public Debt Act, he said.

Furthermore, Lai argued, the legislation would cause the central government to borrow excessive amounts every year, crippling its finances.

The use of that figure was somewhat misleading, however.

The amendment Lai criticized would require the central government to allocate at least as much in subsidies to local governments in 2026 as it did in 2025, or about NT$545.5 billion.

Lai's government, however, allocated only NT$280.9 billion for local government subsidies in its 2026 budget proposal, or NT$264.6 billion short of the NT$545.5 billion required.

The other NT$299.2 billion included in Lai's NT$563.8 billion figure was the deficit already proposed for the 2026 general budget and unrelated to the allocation issue.

The NT$563.8 billion would be about NT$109 billion above the statutory deficit ceiling -- defined as 15 percent of the proposed 2026 total budget of NT$3.035 trillion.

The issue came to a head Monday, when Lai did not promulgate the amendment by the statutory deadline to do so, after Cho declined to countersign it over "major constitutional violations," leading to some concerns of a constitutional crisis.

In the video, Lai also warned about the fiscal consequences of another amendment passed by lawmakers Friday that would partially reverse pension cuts for civil servants and public school teachers and halt planned reductions through 2029.

Lai said the measure, which would in effect offset part of the pension reforms introduced by the former Democratic Progressive Party administration in 2018, would result in a NT$700 billion shortfall in the public service pension fund.

"Former President Ma [Ying-jeou] warned in 2013 if the pension system was not reformed, it would run over the cliff like a speeding train," Lai said. "Now, that train is turned around again and speeding toward the cliff."

The major partisan rift between Lai and the opposition-controlled Legislature was also evident in his criticism of other bills sponsored by members of the opposition Kuomintang (KMT) caucus which he sees as "abusing" their legislative power.

He called on sponsors of those bills to withdraw them, as they are sending what he said was a "dangerous" signal that opposition lawmakers can abuse their power and pass bills encroaching on social justice and democracy.