Review on the 2012 draft of Act Governing the Allocation of Government Revenues and Expenditures--base on the finance autonomy of local governments

The autonomy right of local governments are constitutionally protected, which means the financially autonomy shall be equally protected. The allocation, adjustment, and classification of revenues and expenditures for public finance by governments at all levels in the Republic of China shall be as prescribed in the Act Governing the Allocation of Government Revenues and Expenditures. Therefore there is need to discuss how this Act is to make the autonomy right of local governments realize. Financial revenues and expenditures of government are divided into each level of government, at the same time, with the redistribution of tax revenues and providing subsidies to adjust the financial situation between. Under the current system, however, cannot improve the financial unevenness betweens and with the central government. Local finance problems such as insufficient of own financial resources, rigid expenditure structure, and heavy debt burden are pointed out in the draft amendment of the Act Governing the Allocation of Government Revenues and Expenditures (2012). What mentioned above makes it difficult for local government to realize its own policy and then also makes it almost impossible for the autonomy right of local governments to be materialized. Although the content of the Act has made some revolutionary change on the way of redistribution of tax revenues and made the system of subsidies legalization, and increasing the amount of taxes for distribution, unify the standards between municipalities, counties and cities, as well as to enhance fiscal discipline, it still leaves some critical problems unsolved. The problems leaved unsolved mentioned above however cannot be shunned. It strides to use the financial demands of each districts as new standard of the allocation of government Revenues, yet it still use the education and social welfare expense as the key factors to measure the financial demands. After all, what is the combination between the two still need to be clarified. When we try to describe what is ""Financial demand"", we need related factors. Actually the factors selected reflect the values we bare and the future we choose. If we make the best of the allocation of resource, it could help us realize the local governance and constitutional values. For long we ignore the power of allocation. For example, we don''t think it is as important as revenues and expense to be allocation, or there is a issue that the public debt betweens central and local government, or the local governments should be divided. Now is the time we face it, that the governing of the allocation of government revenues and expenditures takes a big role on the protection of local governance. This paper try to introduce how it work under the Act Governing the Allocation of Government Revenues and Expenditures, and try to propose some suggestions for the 2012 draft of Act Governing the Allocation of Government Revenues and Expenditures though analyzing the regulations, interpretations, domestic and foreign literature.