The Study on Government Grants to Groups and Individuals : A Legal Approach
Date Issued
2010
Date
2010
Author(s)
Yu-Chu, Liu
Abstract
According to prestigious international credit rating agencies, Taiwan used to suffer from poor structured finance and high financial deficit. Organization for Economic Co-operation and Development (OECD) points out that improving economy shall start from reducing expenditure instead of increasing tax. In this case, when reviewing the government expenditure over the last decade, it is discovered that ‘subsidy and bounty’ always account for the biggest share in the first-class usage category of Central Government General Budget. The budget of subsidy and bounty is composed of two major parts, inter-institutional subsidy (internal) and private sector subsidy (external). The former involves simply the inter-governmental or inter-institutional adjustment, while the latter has the nature of resources re-allocation, bringing about the governmental financial sources’ transferring expenditures to external sectors. Nevertheless, the national treasury, in general, is not self-liquidating. Moreover, the government used to have as much as four or five hundred billion New Taiwan dollar budget spent on subsidizing groups and individuals annually. The subsidy is not only huge, but in increase. This situation is worth noticing.
Concerning the dramatic increase of governmental subsidization on groups and individuals, it may have something to do with civil associations springing up like mushrooms. After the Martial Law was abolished, the political democratization encourages people and interest groups to express their needs and fight for their benefits bravely. The government then provides it service in the way of public-private partnership by subsidizing them. However, subsidy and bounty involve delicate issues like interest distribution, subsidizing some specific groups and individuals may damage the interests of others. Besides, there are no comprehensive or fundamental laws regulating how the government subsidizes groups and individuals. Current laws concerning subsidy and bounty are mainly administrative laws except for some laws, regulations and orders; the concept and scope of related laws are lack of clear definitions as well. Moreover, the budget is so poorly recorded and lack of transparency that the outside world is unlikely to understand the details of subsidization, resulting in information asymmetry. Therefore, the study compiles related laws and legal theories concerning governmental subsidy on groups and individuals, complementing it with the administrative experience of Germany and Japan to serve as a reference for the government to design a better system within possible scope to enhance the operation of its governance.
The main observations of this study are as following:
1. The present governance of subsidization is poor and its information is not transparent, either.
2. The constitution places great emphasis on people’s security as well as subsidy and the council of grand justice has explained some rules of subsidization.
3. Although law is the means to form the policy of subsidization, its regulations are rough without specific authorization, clear system and concept.
4. The scope of grand events concerning public interests is not defined, so there are no norms to follow.
5. There are abundant administrative laws of subsidization, mostly issued after 2000.
6. The regulations of subsidization issuing by the Executive Yuan are not of high ranks since they are no more than administrative rules and the limit of subsidization is empty words.
7. The operation of establishing autonomous laws and regulations varies from place to place.
8. It seems inappropriate when some subsidies are issued without filing the budget in accordance with subsidization laws beforehand.
9. Categories of subsidization laws concerning social welfare are of great variety and its subsidy are large, that local governments and the central government do not share the same concept of social welfare expenditure.
10. The subsidization systems run respectively in Germany and Japan are unique.
Based on the observations, this study proposes the following suggestions to policy-making:
1. Improve the governance of subsidization operation, enhance the budget review, and publicize relevant information.
2. Since law is the means to form the policy of subsidization, clear regulations and specific authorization are needed.
3. Define things like important public interests and creating local residents’ rights so that they may be followed.
4. Research to set the limit and deadline of subsidy so as to establish an adjustment mechanism.
5. Establish supportive measures of subsidizing social welfare.
6. Establish the basic law of administrative subsidization or Leistungsverwaltung.
Finally, this study suggests that the future study may focus on two aspects:
1. Design substantial laws and supportive measures regarding the basic law of subsidization or Leistungsverwaltung.
2. Discuss issues concerning the management and politics of groups and individuals in the private sector subsidized by the government.
Subjects
Leistungsverwaltung
subsidy
bounty
group
private sector
basic law
legal reservation
council of grand justice
SDGs
Type
thesis
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