Abolition of farm tax only a beginning
You Nuo China Daily  Updated: 2006-01-09 05:45

A small good thing is not a big good thing at least not yet. While all in China welcomed the central government decision to discontinue the 2,600-year-old agricultural tax, some press commentators might have made a mistake by exaggerating its significance.

Abolishing the tax is only a start for this rapidly industrializing economy to relieve pressure on its farm sector, which lags behind in development. But it obviously needs to take far more innovative moves to address the problems accumulated there.

Those commentators went too far indeed by lauding the move, which affects just less than 0.01 per cent of Chinese GDP, as the economy's "paying back" and "nourishing" of its struggling farmers, and even as a shining example of some vaguely defined "political civilization."

In fact, a couple of years ago, the share of agricultural tax in China's government revenue already declined from more than 40 per cent in the 1950s to less than 1 per cent, thanks to the unprecedented growth in industry and commerce.

In 2004, Chinese farmers paid 23.2 billion yuan (US$2.86 billion) in agricultural tax, when the size of the whole economy, in terms of GDP, was more than 13.6 trillion yuan (US$1.7 trillion), and later (in December 2005) revised to around 16 trillion yuan (close to US$2 trillion).

Not only did farming remain one of the worst paid jobs in society, farmers were receiving the least support (and in many cases none) in medical care, and in education. Just to slightly balance the ugly disparity, already 28 provinces scratched the tax in 2005. And for the whole year, only 1.5 billion yuan (US$185 million) was collected across the nation under that revenue category.

So, as a government revenue, agricultural tax was only of a nominal significance when the national legislature passed the motion to discard it altogether. But the real significance of the move, instead of any major support to the farm sector, is rather that the urban economy has grown so large that the little amount of finance it can squeeze from rural society has become dispensable.

Taking nothing from a poor man does not mean giving him an opportunity, let alone a free opportunity to achieve a decent life. In this regard, what China has done is far from enough.

There are many things that the government can immediately start doing without spending a penny just by putting an end to some old practices that make those opportunities hard to come by.

For instance, the discriminatory rules on rural-urban migration should be all lifted. They are against the very principle of the rule of law in the first place. The key is to make it easy for rural migrants to look for jobs (whatever jobs), and to enjoy equal legal support when they claim rights, own properties and take lawsuits in places other than their hometowns.

Schools and medical clinics, especially privately-owned ones, shouldn't be allowed to charge any surcharges from their rich customers without rendering free admission and services to rural migrants and their children, at least to a certain percentage.

The same rule can be applied to employers of all trades. Services that are filled with low-skilled migrant workers also deserve tax incentives, so long as they follow labour rules and pay their workers decently.

All cities must submit their annual settlement programmes for new migrants to have their urban development plans approved by the higher authorities.

Every five years (when a new five-year plan is launched), there should be new cities especially designed for generating jobs for rural migrants. Showcase programmes of this sort should be seen near Beijing and Shanghai, and in the Pearl River Delta to serve as national examples.

In the meantime, pilot schemes should be started for farmers to form joint-stock companies to develop and own local public infrastructure and logistic services with a public demand, such as the supply chain of crop seeds and animal feeds. Public auditing should be strict, to prevent local cadres from interfering with their business operations.

Finally, the government's existing accounting method should be revamped. The farm sector should not be seen just as a cost centre, or a unit that constantly requires "paying back" or "nourishing" in the official accounting book.

With half of the nation's labour force still tied to it, the farm sector is an untapped resource, and a huge one. Just think how much in GDP, and how much more service (and thus convenience in the daily life of the People's Republic of China) can be created just by organizing all these men and women in a different way.

Email: younuo@chinadaily.com.cn

(China Daily 01/09/2006 page4)