As the nine-in-one local elections draw nearer, the opposition-dominated legislature have proposed and passed a slew of amendments critics described as “money-pit” legislation that would not only create a fiscal imbalance, but also endanger Taiwan’s democracy.
On Friday last week, the opposition Chinese Nationalist Party (KMT) and Taiwan People’s Party voted through an amendment to Article 22 of the Senior Citizens Welfare Act (老人福利法), which stipulates that the central government shall fully subsidize National Health Insurance (NHI) premiums for people aged 65 or older whose annual comprehensive income does not meet the tax-filing threshold or whose income tax rate is less than 20 percent.
The amendment would increase the central government’s annual expenditure by at least NT$40 billion (US$1.23 million) and reach more than NT$62 billion by 2049.
KMT legislators also proposed and directly forwarded to committee review an amendment to the Child and Juvenile Welfare and Rights Protection Act (兒童及少年福利與權益保障法), which stipulates that the central government must provide a non-means-tested subsidy covering all NHI premiums for children younger than six. The proposal is projected to increase annual government expenditure by another NT$8.8 billion.
The Ministry of Health and Welfare has warned that the amendments would drain the government’s medical and welfare budgets, and shrink the subsidy budget allocated for disadvantaged nationals.
The Cabinet has approved the allocation of NT$235.7 billion in excess tax revenue to fund a universal cash handout of NT$10,000 next year. Not to be outdone, KMT legislators last week passed a special act to increase the amount to NT$20,000. That has directly been sent to a second reading and cross-party negotiations.
The KMT Central Standing Committee is resolved to push the act through before the local elections on Nov. 28, with KMT caucus whip Fu Kun-chi (?) saying party legislators would strive to complete legislation and distribution by the end of the year.
However, the Ministry of Finance said that as the opposition-controlled legislature had amended the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法) — transferring a significantly larger share of revenues to local governments — the KMT proposal would cost more than the NT$250 billion left to the central government, which would force it to issue debt to fund the cash distribution.
Experts also warned that the proposal would contravene the Public Debt Act (公共債務法) and the Budget Act (預算法), which stipulate that government borrowing and public debt should only be used for capital expenditures, not for recurring expenditures, such as funding general cash handouts.
While advocates of cash handouts say it would boost domestic consumption and the economy, Academia Sinica research show that previous cash distributions — NT$6,000 in 2023 and NT$10,000 in March this year — showed that the marginal propensity to consume only reached 0.15 and 0.16 respectively, far below the expected standard of 1. That means the handouts had a very limited effect on stimulating public consumption and expanding demand.
The IMF has warned that indiscriminate cash handouts incur extremely high fiscal and budgetary costs, and are less efficient than targeting those who need the money when it comes to maximizing the economic multiplier effect while maintaining fiscal discipline.
As it is, the legislature has already incurred the public’s ire with its dismal record, including repeatedly extending the legislative session, failing to review urgent bills in time and delaying passage of the fiscal 2026 budget by more than 350 days. Opposition lawmakers’ promotion of “money-pit” bills without careful financial planning has further tarnished the reputation of the legislature, which has not only overstepped the Executive Yuan’s constitutional right of drafting the government budget, but also sabotaged national fiscal discipline and stability.
The working and taxpaying population has continued to decline due to a low birthrate, and legislation that waste tax revenue would only saddle the younger generation with a heavier financial burden.
The hasty passage of such bills before the elections has also triggered concerns about “vote buying” and partisan political interests. Legislation that squanders public resources and leverages taxpayer dollars to buy votes would ultimately stain Taiwan’s democracy. Regardless of whichever party takes power in the future, the country and its people would bear and pass down to future generations a depleted treasury and a legacy of debt. The public must use their right to vote wisely to stop populist policies, safeguard the country’s democracy and protect the future of young Taiwanese.