Transfer payments set to rise

The government is poised to pump in more money and adopt more favorable taxation policies to narrow the income and wealth gaps among people in different regions, senior fiscal officials said yesterday.

"We will increase the volume of transfer payments to ease fiscal difficulties of grassroots governments," Ding Xuedong, vice-minister of finance, told the 2008 Forum on Fiscal Reform in China.

In 2006, China scrapped the 2,000-year-old agricultural tax and other farming-related taxes, reducing the tax burden on farmers to the tune of 50 billion yuan annually. But grassroots governments have suffered as a result, because these revenues constituted the bulk of their fiscal income.