TAIPEI (Taiwan News) — The Cabinet on Tuesday said that subsidy cuts to local governments were a direct result of budget reductions made by the legislature to the 2025 budget proposal.

Cabinet Spokesperson Michelle Lee (李慧芝) said the NT$143 billion (US$4.8 billion) in cuts left little flexibility. She explained that funding was prioritized to avoid impacting national security, foreign affairs, and education, per CNA.

Lee responded to opposition claims that the Cabinet acted illegally, saying regulations grant the central government discretion over subsidy allocations. She also noted that a recent amendment to the budget allocation law, which took effect in March, could not retroactively affect the already reviewed budget proposal.

The KMT criticized the cuts on Wednesday, accusing the Cabinet of breaking the Act Governing the Allocation of Government Revenues and Expenditures, per Tai Sounds. The party argued that subsidies are a cornerstone of Taiwan’s local governance framework.

TPP Chair Huang Kuo-chang (黃國昌) echoed the KMT’s concerns, saying the legislative cuts were intended to target central government spending, not local government funding, per NOWNews. Taipei Mayor Chiang Wan-an (蔣萬安) said the city would pursue legal action over the subsidy reductions, per NOWNews.

DPP lawmaker Wu Szu-yao (吳思瑤) dismissed the opposition’s criticism as political misdirection, per Tai Sounds. Wu emphasized that this year’s budget originally allocated a record amount to local governments, but the legislature’s budget cuts forced a rollback in funding.