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Agricultural tax to be scrapped from 2006
By Xing Qinjiao (China Daily)
Updated: 2005-03-06 01:48

China will exempt farmers from agricultural taxes in 2006, two years ahead of schedule, Premier Wen Jiabao announced in Beijing yesterday in his annual government work report to the country's top legislature.

A farmer from Xinjiang County, Shanxi Province, points to a new harvester.  The government will exempt farmers from agricultural taxes from 2006, said the government work report. [newsphoto]

"The agricultural tax will be exempted throughout the country next year, which means what had been targeted for five years will be achieved in just three," Wen told the annual full session of the NPC that opened yesterday.

The premier said his government will speed up the nationwide process of agricultural tax reduction, exempt the tax in 592 counties included in the national poverty relief programme and do away with livestock taxes across the country before the end of this year.

"Revenue decreases in local budgets incurred as a result of taxes reduced or exempted on agriculture and livestock will be offset principally by transfer payments from the central government," the premier said in his report.

This will involve an additional 14 billion yuan (US$1.7 billion) from the central budget this year and will bring the total expenditure to 66.4 billion yuan (US$8 billion), he added.

The government first announced its plan to phase out the centuries-old levies during last year's NPC session, at which the premier pledged to reduce the overall agricultural tax rate by more than one percentage point each year, and rescind the levy in a matter of five years.

To date, 26 of the 31 provinces, municipalities and autonomous regions on the mainland have moved to eliminate all agricultural taxes before the end of this year, when about 730 million farmers will have been relieved from the levy, said Fan Xiaojian, vice-minister of agriculture, at a recent conference in Shandong Province.

The five localities that will continue to charge agricultural taxes, the provinces of Hebei, Shandong, Yunnan and Gansu, and the Guangxi Zhuang Autonomous Region, will reduce taxes by at least 2 per cent this year, said Fan.

For Chinese farmers, who for centuries have paid taxes based on the size of their families and the acreage of cropland they farm, the news is no doubt a boon.

"In Jilin Province, Northeast China, the tax exemption released the farmers' tax burden by 1.4 billion yuan (US$170 million) last year, an average 100 yuan (US$12) for each farmer," said A Nuhan, an official from the Mongolian Autonomous County of Qian'an.

Besides the tax exemption, the Chinese Government has also worked out a series of agriculture-friendly policies to boost the rural economy and increase farmers' income, including direct subsidies for grain growers and more subsidies for farmers to buy improved crop strains, agricultural machinery and tools.

Official statistics indicate that these preferential policies brought 45.1 billion yuan (US$5.4 billion) in direct economic gains to China's 900 million farmers last year. The National Statistics Bureau acknowledged the average income for China's farmers rose 6.8 per cent in 2004, the highest in seven years.

The central government's resolve to boost farming and increase subsidies also fired up the enthusiasm of grain growers. Last year, China's grain output reached 469.5 billion kilograms, up 9 per cent over the previous year.

"I hope the government will go on with its supportive measures so that farmers can have a bulging wallet and a better life," said Xu Dequan, an NPC deputy from Henan Province during an interview with Xinhua on Thursday.

An official with the State Council confirmed on Friday that the country will continue supporting agriculture, farmers and rural areas this year.

In 2005, government departments at all levels are expected to allocate at least 200 billion yuan (US$24 billion) for benefits for people living in rural areas, an average 222 yuan (US$27) for each of the 900 million rural residents in the country.

Meanwhile, the central coffer earmarked funds for training courses on agro-science and technology for approximately 100,000 farmers in 100 counties nationwide, in the hopes of helping 2 million farmers learn the basics in science and technology to promote agricultural production.

On the other hand, the government will work to improve education, health and cultural undertakings in rural areas so that residents there can enjoy more social welfare benefits.

Premier Wen pledged in his government work report yesterday that issues concerning agriculture, farmers and the rural areas constitute a "top priority of all our work".

"With China's agriculture-friendly policies in place, I feel it's an honour to be a farmer," said Xin Xiyu, an NPC deputy from central China's Hubei Province. Tax exemption, subsidies and other preferential measures have helped the 53-year-old woman farmer and many of her rural peers improve their incomes by breeding livestock and running other businesses.

For Xin, the preferential treatment is more like the "emancipation of mind" for Chinese farmers who have lived under financial and psychological burdens for ages.

She said the tax-free rural areas are full of promise, "as long as you have the wit and know your stuff."

End of agriculturaltax well received

Scrapping agricultural taxes by next year was one of the many features of Premier Wen Jiabao's government work report yesterday that won kudos from nearly 3,000 national lawmakers and foreign diplomats.

For Chinese farmers who have for centuries been paying taxes based on the number of their family members and crop-land acreage, the news is welcome relief.

"Agricultural tax will be exempted throughout the country next year, which means what had been targeted for five years will be achieved in just three years," Wen told lawmakers of the 10th NPC and members of the 10th National Committee of CPPCC.

Xu Dequan, an NPC deputy from Central China's Henan Province, said: "I hope the government will continue with its supportive measures so that farmers can have bulging wallets and a better life."

NPC deputy Xing Kezhi from Tianjin said: "It is vital to take care of the issues of agriculture, rural areas and farmers in order to build a harmonious society."

"If farmers' income does not increase and the wealth gap between urban and rural regions keeps widening, it would be unfavourable to social stability and sustained growth."

During the report delivered at the opening session of the current NPC, Wen offered a wide range of measures to improve people's livelihood, promote more balanced development and build a harmonious society.

"Since he took up his post in 2003, the premier has been making pledges which he has been fulfilling," said Zhu Shanping, an NPC deputy from East China's Jiangsu Province. "This makes us feel more confident about the government."

Serge Abou, the European Union ambassador to China, said the work report was very extensive for it not only reviewed the work done in the past year but also forecasts the state of the nation's major projects in 2005.

The concept of a harmonious society covers a wide range of topics, including the economic growth and government responsibility, he said.

"As for me, I am more concerned with global issues like energy efficiency, the environment and the prevention of disease," said the ambassador after attending the NPC meeting. He added that he was very satisfied with the good intentions of the Chinese Government on those matters and had "confidence in their implementation."

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