The Political Economy of Taiwan's Special Budget Development From 1945 To 2008
Date Issued
2010
Date
2010
Author(s)
Chang, Chi-Kai
Abstract
The Special Budget in our country is unique around the world which is designed for national crucial emergent spending. However, to define to be “crucial” and “emergent” is very subjective and flexible while the relevant regulations is lenient. In the recent years, the government takes this as the excuse to avoid the Public Debt Act, Article 4 paragraph 5, “the limitation of annual debt”, and the Budget Act, Article 23, “(debts) shall not be used for current expenditures”. From 1991, our government had exploited the Special Budget to issue debt for up to hundred billions which cause the raising of financial deficit for our treasury. Authoritative international rating agency, such as IMD, revised the competitiveness of our country downward every year.
This essay applies historical analysis based on political economy, discussing the Special Budget from 1945 to 2008 according to the changes of political and economical systems and financial policies in three main stages:
Authoritarian System Period (1949-1987)
The Special Budget was controlled by specific authoritarian figure and the public voice was muted. Under this system in Chiang’s times, 20 Special Budgets were proposed for the main purpose of national defense programme and rural water conservancy construction which was corresponded to “counterattack the mainland” and “construction of Taiwan”. The principle of financial policies during this time was “making ends meet”—fewer Special Budgets was proposed with smaller amount and less debts.
Transformation of Authoritarian System Period (1987-1996)
Special Budget was as a result of the conflict-compromise of government and the public. After abolishment of Martial Law, the public speaks out its voice. During this period, 7 Special Budgets were proposed mainly for resolving the public grievance and focusing on traffic issue. Building the image of a “capable government” as the objective, the financial policies were adjusted to “revenue according to expenditure” that much more Special Budgets were brought out with boosting amount and huge amount of debts were launched.
Consolidation of Democracy Period (1996-2008)
The political election started to lead the way and Special Budgets started a wide range of coverage. The purpose for winning the election and to flatter the electoral district became the base of leading the government execution. 14 Special Budgets were proposed containing miscellaneous items as the response for the election. In order to consolidate the regime, the financial policies were changed to “more debts, less worries”. Special Budget was brought out almost every year with the amount up to hundred billions. During the 8 years governing of President Chen, Shui-bien, the debt ratio of Special Budgets was 84.83%.
According to the cause-and-effect analysis by historical study, we can find out that Special Budget has its different quality under different political and economical background. Different government authority interacting with the public in different period of time determines what the Special Budget is to be. Therefore, this essay comes to a conclusion as the following three points:
1.Special Budget systems—the favorite trick of the government authority.
2.The role of government—making use or abuse was a just slim difference.
3.The relationship of government and public—authority-controlled and election-oriented.
Most important of all, Special Budget is now equal to destroying the financial discipline and huge amount of debt that threatening the financial base of our country. Our conclusion of this essay is that Special Budget system should be fully modified or totally abolished! This financial loophole of our country should be avoided and alignment to the resolution of supplementary budget systems from America, Britain and Germany should be applied for crucial and emergent issues. Otherwise, a strict restriction should be set for proposing of Special Budget that ensures the source of money is solid for certain expenditure and “no debt issuing is allowed for Special Budget”.
Subjects
Special Budget
budget
deficit
President Chen Shui-bien
political economy
SDGs
Type
thesis
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