KMT scores an own goal

I recently wrote about the allocation of centrally-funded tax revenues to local governments 中央統籌分配稅款.  This topic has resurfaced in a minor news story over the last week.

While interpolating Finance Minister Li Shude 李述德, KMT legislator Cai Zhengyuan 蔡正元 lashed out at DPP local governments for opposing ECFA.  He averred that local governments that opposed ECFA should not be allowed to get any of the centrally-funded tax revenues.  Lu Shude replied that Cai had read his mind (roughly translated).  The DPP immediately seized on this exchange, charging the KMT with political blackmail and no understanding of democratic politics or the relationship between local and central governments.  KMT secretary-general Jin Pucong 金浦聰 tried to damp down the controversy by suggesting that Cai did not speak for the party and perhaps should be more careful about what he said in public.  Cai responded indignantly that Jin didn’t know what he was talking about.

This was an enormous gaffe for the KMT.  Threatening to take away funds from local governments is a pretty good way to ensure that voters in those counties never vote for the KMT again.  It also violates principals of free democratic debate.  At the very least, one would hope that the KMT believed that ECFA will provide sufficient benefits that they could sell it to voters rather than simply threatening voters that they must accept it “or else.”  More generally, debate on public policy is supposed to be acceptable in democracies.  Various sides are supposed to be able to vigorously present their arguments.  It would be different if a local government were to actively violate some law passed by the central government, but, as far as I know, that has not happened.  ECFA has not even been signed yet, and local governments don’t have much power over international trade regimes.  At this point, the various local DPP governments are simply yelling that ECFA is a terrible idea.  In a democratic polity, that is not a cause for fiscal retribution.

From the KMT’s point of view, the worst thing about this flap may be that Cai and Li caused a stir for no useful reason.  The allocation of tax revenues is codified in law.  It is not a discretionary pool of income that the KMT can dole out according to its political needs.  In other words, there was never a chance that the KMT could actually carry through with this empty threat; the only effect is the backlash.  Shouldn’t the Finance Minister have known this?  Also, shouldn’t Cai have known that he was making a huge political error?  Li is a technocrat, so I’ll forgive him for not realizing what a political blunder he was committing by going along with Cai.  Cai Zhengyuan is a fairly savvy politician who is supposed to be good at this sort of thing.  He used to be the KMT party spokesman and the spokesman for the Ma presidential campaign, for crying out loud.

Tags: Cai Zhengyuan, ECFA, revenue, tax