Farm tax to be axed in 3 years
By Fu Jing (China Daily)
Updated: 2004-04-09 23:18

Speedier implementation is mainly thanks to the unanimous support for the decision from both provincial and local governments, say policy insiders.

Jiang Zhongyi, a senior researcher at the Ministry of Agriculture said China's leaders are confident about the policy adjustment, which is expected to substantially increase farmers' incomes.

Jiang revealed that Chen Xiwen, deputy director of the Office of Central Financial Work Leading Group told a recent closed-door meeting of top officials that "farmers' agricultural tax is sure to be cancelled within three years."

"This is good news for rural people, who currently earn an average monthly income of about 200 yuan (US$24)," said Jiang.

Premier Wen's initial plan to axe the tax in five years, announced at last month's second session of the 10th National People's Congress, won wide public backing and has been the subject of much media attention.

"The media has recently played a major role in changing the attitudes of some provincial and local governments, who were previously unwilling to scrap the tax," said Jiang, adding that grass-roots governments could collect other fees using the excuse of collecting the agricultural tax.

Statistics indicate that the agricultural tax raises just 30-40 billion yuan (US$3.6-4.8 billion) annually, around 5 per cent of the government's financial income.But the local governments also levy additional fees of around 100 billion yuan (US$12 billion).

Tan Qiucheng, a researcher at the Chinese Academy of Social Sciences said scrapping the agricultural tax is a drastic measure which will prevent the arbitrary collection of fees from rural people.

"It is also a measure to put more money into farmers' pockets by encouraging them to grow more grain and secure the country's grain security," said Tan.

Increasing the income of China's 900 million farmers and grain output is high on the government's agenda. This year, the central government will earmark 10 billion yuan (US$1.21 billion) from its grain risk fund to directly subsidize grain farmers, alleviating falling output and slowing income growth.

But China's grain output dropped by 5.8 per cent from 2002, reaching 430.65 million tons last year. The figure is expected to rise to 455 million tons in 2004.

Despite the speedier removal of agricultural tax, Jiang Zhongyi expressed his concern that if the government structure is not streamlined, the goal of easing rural people's burdens will not be achieved.

Statistics show that in China, about 35 taxpayers support a civil servant, and the ratio can be 20:1 in some western provinces. The bloated grass-roots bureaucracy needs a increased expenditure, which is always achieved from rural people using administrative means.

"This is the fundamental reason for the long-term difficulties in terms of alleviating rural people's financial burdens," said Jiang. "Streamlining the administrative structure will become a bigger challenge and even more urgent task."



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