Farm tax scrapped in 22 Chinese provinces
(Xinhua/Shenzhen Daily)
Updated: 2005-01-18 11:22

China's agriculture enters a new era of zero tax with 22 of its 31 provinces, municipalities and autonomous regions on the mainland scrapping all agricultural taxes, releasing millions of farmers from their centuries-old tax burden in the world’s most populous nation.

Premier Wen Jiabao announced in March 2004 that China planned to scrap all farming taxes in five years. With more provinces working to relieve burdens on farmers, whose income growth lagged behind their urban counterparts in the past two decades of reform and opening up, the target is expected to be fulfilled two or three years ahead of schedule.

Apart from the Tibet Autonomous Region where no farming or stockbreeding taxes have ever been imposed, China tried the tax-free policies in two major northeastern agricultural provinces, Heilongjiang and Jilin, in 2004, and the other 19 provinces and municipalities announced the exemption this year.

Also in 2004, the Central Government cut agricultural taxes by 3 percent in 11 provincial-level regions and by 1 percent in other areas, the Finance Ministry said.

The taxes and fees on farmers were slashed by about 28 billion yuan (US$3.38 billion) last year, a 30-percent reduction. Before the tax relief reform, the State collected about 60 billion yuan a year in agriculture taxes.

Nearly 600 million farmers have also benefited from direct subsidies from local governments which totaled 11.6 billion yuan while the Central Government last year allocated 34.2 percent of the treasury bond proceeds, 37.6 billion yuan (US$4.5 billion ), for agricultural products, mainly in grain production regions.

Official statistics show that the per capita income for farmers last year grew by 6 percent, the biggest rise since 1997.

The zero-tax policies were implemented in major agricultural provinces such as Henan, Shanxi, Heilongjiang and Jilin, and relatively developed provinces and municipalities such as Beijing, Shanghai, Guangdong, Jiangsu and Zhejiang.

About 400 million farmers nationwide are expected to benefit from the exemption.

Some farmers working in cities planned to return home to resume farming after the tax exemption was announced.

Economists say the exemption will stimulate domestic consumption and promote the harmonious development of all the sectors of society.

Tax officials said the move also helped reduce crime rates.

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