China to scrap all agricultural tax in 2006
Updated: 2005-12-20 09:38
Chinese Finance Minister Jin Renqing said Monday that China will scrap all
agricultural taxes, putting an end to a levy that has burdened China's farmers
for 2,600 years in China.
An expert with the State Administration of Taxation said the tax cuts come
four years ahead of schedule. Just last year Chinese Premier Wen Jiabao made the
commitment to eliminate agricultural taxes within five years.
The upcoming phase-out of the tax represents another significant step taken
by China to relieve the financial burden on the country's 800 million farmers
and an attempt to narrow the widening income gap between urban and rural
To date, 28 of 31 provincial areas on the Chinese mainland have exempted
farmers from agriculture taxes. The last three provinces are expected to follow
suit next year.
The minister said the central government allocated 66.4 billion
yuan (US$8.3 billion) in transfer of payments to local governments to compensate
for the phase-out of the tax this year, an increase of 271 percent over that of
China's tax authorities said China is expected to
collect only 1.5 billion yuan (US$187.5 million) in agricultural tax, compared
with 23.2 billion yuan (US$2.9 billion) last year as part of the ongoing rural
Farmers' income soared by 6 percent last year thanks to the tax reform and
grain production subsidies paid by the central government, the fastest growth
Jin said the total funding from the central government
for farmers, agriculture and rural areas is expected to exceed 300 billion yuan
(US$37.5 billion) this year, up 50 percent over 2002.
Local governments have also increased their funding for rural areas, he
China used to collect up to 60 billion yuan (US$7.5 billion) in
agricultural taxes before tax reforms began three years ago.
Agricultural tax was one of the key sources of revenues of the central
government in the 1950s. In recent years agricultural taxes accounted for on one
percent of the total government revenues thanks to the rapid development of