Local county, city gov’t deficits over NT$619 bil.

CEPD officials said that in fiscal 2006 alone, a total of 21 local county and city governments managed to source only 53.8 percent of their income budgets on their own, with the remaining 46.2 percent financed by the central government.

Personnel costs accounted for the largest portion, at 58.2 percent, of the total expense budget in fiscal 2006, reaching a high of NT$305.8 billion. As many as 16 county and city governments failed to cover their personnel expenses with the budget incomes they could secure on their own, according to CEPD officials.

The annual budget deficit posted by local county and city governments is estimated at NT$49.6 billion, much higher than a projected annual increase of NT$30 billion in their income, seen after a set of revisions to the statute governing tax budget allocation are put into practice.

Under the revisions, the expanded tax revenue pie to be shared by local governments will be composed of all the business tax revenue, estimated at some NT$230 billion a year, and 80 percent of tobacco and liquor tax revenue, at around NT$40 billion.

In the past, such a pie comprised 40 percent of business tax revenue, and 10 percent of income tax revenue and commodity tax revenue each. But the latter two kinds of tax income will no longer be incorporated into the tax revenue pie to be distributed to local governments.

One other key point of the revisions is that all levels of local governments can keep all the land value increment tax income they collect, instead of having to contribute 20 percent of the income to the national coffers.

In addition, local governments will be allowed to keep 60 percent of inheritance tax income, compared to 50 percent for metropolitan cities and 80 percent for local counties and cities as enforced in the past.

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