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Agricultural tax revenues to fall 93% this year
Updated: 2005-05-24 19:51

China's agricultural and animal husbandry tax revenues are expected to fall by 93 percent from 23. 2 billion yuan (2.8 billion US dollars) to 1.5 billion yuan (182 million US dollars), tax officials said here Tuesday.

Officials with the Agricultural Tax Bureau of the State Administration of Taxation attributed the projected revenues drop to efforts the central government has made to reduce farmers' financial burden by eliminating or cutting the taxes.

To better support agriculture and rural economy and narrow the growing income gap between rural and urban areas, Chinese Premier Wen Jiabao pledged in March 2004 that the country will scrap agricultural taxes within five years.

In March this year, the premier said the government would reach the goal to phase out agricultural taxes in 2006, or two years ahead of schedule, since about two thirds of the country's provincial areas had abolished the taxes with or without funding from the central government by February this year.

To date, 27 provinces, regions and municipalities have announced abolishment of the tax by the end of this year, while the remaining four, the provinces of Hebei, Shandong, Yunnan and Guangxi Zhuang Autonomous Region, have already lowered the tax rates as required by the central government.

Official statistics show that in 2004, the tax exemption and tax cut in rural areas stood at 28 billion yuan (3.4 billion US dollars), helping cut burdens on farmers by 30 percent.

Agricultural taxes had long been a major part of financial revenue in China. But with rapid economic development in the past years, the proportion of it in state exchequer has decreased to no more than 1 percent from 41 percent in 1950.

Tang Min, chief economist with Resident Mission of Asian Development Bank (ADB) in China, said the exemption of agricultural taxes will help increase farmers' income and promote domestic consumption and further ensure a coordinate development in rural and urban areas in the long run.

Because of tax cut and grain subsidy, China's farmers enjoyed an annual income growth rate of more than 6 percent in 2004, the highest since 1997.

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