Taxation reforms continue in effort to help farmers

Vivian Wu

Middlemen are being eliminated from the collection of land transaction levies, a move intended to boost rural coffers

Tax officials say the central government will continue to push for rural tax reforms to help reduce the financial burden on mainland farmers.

During a two-day conference in Beijing which ended on Thursday, officials revealed that from January no 'middlemen' would be used in the collection of land transaction taxes.

The authorities started imposing transaction taxes on all land deals in 1997, but they have been collected through several government departments which often take a percentage of the levies for their 'services'.

'In order to enhance the management of land transaction taxes, tax departments will collect the taxes directly,' said Xu Shanda , a vice-director of the State Administration of Taxation, on Thursday.

The amount of tax being paid on real estate has increased rapidly in recent years.

The state is expected to reap 50 billion yuan from land transaction taxes this year.

'The rapid growth of land transaction taxes has greatly alleviated the financial burden on local governments [in rural areas] which have been under pressure in recent years due to reductions in agricultural taxes,' Mr Xu told Xinhua.

Last year the government slashed a raft of taxes, which Mr Xu said had cut farmers' tax bills by a third.

Analysts said the reform would not directly help farmers, but might enable local governments in rural areas to strengthen their finances and therefore rely less on taxes and levies collected from farmers.

'Such taxes only represent a very small proportion of the total tax bill of farmers in rural areas, so I cannot see the direct impact it will have on our rural reforms,' said Professor Dang Guoying , director of the Chinese Academy of Social Sciences' macro-economic studies programme at the Rural Development Institute.

'But if the local governments can collect the taxes directly then that will surely improve their own finances. [This] will ease the financial burden on farmers.' However, he said there were more important things the government should do, such as clarifying the property rights of farmers.

Authorities in the municipalities of Beijing and Tianjin and the provinces of Heilongjiang and Jilin have scrapped agricultural taxes, which the central government has promised to abolish within five years.