TAIPEI (Taiwan News) — A newly passed opposition-led amendment will force the central government to reallocate over NT$375 billion (US$11.47 billion) of its annual budget, leading to spending cuts in defense, labor insurance, and rent subsidies, among other programs.
On Friday, the Legislative Yuan passed the third reading of three KMT-led amendments, including the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法). The amendment changes the proportion of financial resources that go to local governments at the expense of the central government.
At a press conference on Monday, DGBAS Director-General Chen Shu-tzu (陳淑姿) explained that after the amendment to the act, the central government must reallocate NT$375.3 billion, equivalent to 9% of its total revenue. Combined with NT$250.1 billion in general subsidies (6%), the total amounts to 15%.
Chen said that under such conditions, it is unreasonable for certain local government matters to remain with the central government and emphasized that the division of powers should be reassessed. Otherwise, Chen said local governments might spend wastefully to exhaust their budgets, such as expanding non-statutory social welfare programs or building poorly planned “mosquito halls” (underutilized facilities).
She said the 2025 central government budget sets total expenditures at NT$3.13 trillion. Of this, NT$1.81 trillion (about 58%) is legally mandated and cannot be reduced.
For the remaining NT$1.31 trillion, Chen said the defense budget may have to be reduced by as much as 28%, per CNA. Otherwise, cuts would be imposed on already approved or ongoing projects.
Supposing a national defense budget in the coming year of NT$294.5 billion, a 28% reduction would amount to a cut of over NT$82.4 billion. Chen emphasized that a comprehensive review is needed to determine which areas will be reduced.