Central government scraps tax on farmers
For the first time in 2,600 years, China's farmers will not have to pay agricultural tax to the central government. The levy would be eliminated next year, Finance Minister Jin Renqing said yesterday.
The measure, another move to narrow the gap between rich and poor, fulfils Premier Wen Jiabao's 2004 pledge to scrap the tax within five years, Xinhua reported.
The move was a historic first step to lessening the burden for 800 million farmers, Xinhua quoted an expert from the tax bureau as saying. The tax is a 5 per cent levy on cash crops other than tobacco. Farmers will still be liable to pay income tax and local taxes, charges and fees.
Mr Jin's announcement yesterday, at a meeting of the national finance work committee, came a week after the government said it would, from next year, exempt those making less than 1,600 yuan a month from liability for personal income tax.
The agriculture tax was the main source of central government revenue when the Communist Party took over in 1949. It made up 41 per cent of revenue in 1950.
With the growth of the industrial and services sectors, revenue from agriculture tax has become less important and last year accounted for about 22 billion yuan, less than 1 per cent of tax revenue, Xinhua reported.
Mr Jin said government revenue would break through 3 trillion yuan this year, a rise of 15 per cent from 2004. It had taken only two years for government revenue to go from 2 trillion to 3 trillion yuan, the minister said.
Premier Wen said yesterday he would continue building on the current stable fiscal policy by implementing tax reforms and tightening spending.
Separately, Mr Jin named a long list of tax policy priorities meant to curb wastage of natural resources. The list is the first of its kind.
In the coming five years, Mr Jin said, China would build a tax policy to induce entrepreneurship and encourage conservation.
Businesses that used old machinery which produces a large amount of pollution, would be punished by heavier taxes, he said.
Mr Jin stressed that the central government had significantly increased spending on the agricultural sector and on welfare and education.
He said the policy change was thanks to the leadership's change of attitude, under which all levels of government were encouraged to 'provide more help, extract less and let go' on farmers.
Moreover, Mr Jin said the government now clearly favoured shifting its focus from manufacturing to agriculture and from cities to the countryside.
He also revealed that central government spending on education had reached 36.5 billion yuan, a 40 per cent increase from 2002. On health care, he said the government had boosted its funding, for example by creating a special fund to fight Sars and other epidemics.
