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Tax Reform Brings Democratic Reform

The plan introduced in 2003 to reduce and ultimately scrap the agricultural tax has had more far-reaching effects than merely reducing the farmers' financial burden: new research shows that it has also improved rural democracy.

The tighter restrictions on taxation have prevented rural cadres from arbitrarily collecting fees and given farmers a say in locally funded infrastructure projects.

"Villagers finally obtained the right to decide for themselves after the reform," said Han Jun, a senior policy advisor with the State Council Development and Research Center.

Before the reform, besides officially approved taxes, village and township cadres were believed to levy additional fees of around 100 billion yuan (US$12 billion) every year.

In the past, the money was pumped into various schemes, including building infrastructure and paying the wages of rural cadres, but there was no effective supervision of fund allocation, according to Han.

After the tax-scrapping reform was launched in 2003, the central and provincial governments promised to transfer funds to support local projects and forbade rural cadres from raising money under the guise of levying agricultural taxes.

Now when local governments want to build or upgrade infrastructure, they must follow specific procedures to inform the farmers of where and how the money will be spent.

The "one issue, one discussion and vote" pattern, which for the first time allows farmers in a community to take part in the decision-making process, has been spreading rapidly in rural areas.

The recent decision by villagers to build a three-kilometer road in Tongjiang County, a poor, mountainous area of southwest China's Sichuan Province, is an example of how grass-roots activism is working.

After hearing details of the plan for the road, most of the 100 residents of the county's Chengzishan Village voted for the project, which would link them with the outside world. They all agreed that each resident should donate 20 yuan (US$2.40) to build a 5-meter section of road.

"This is an excellent example of farmers participating in their own affairs after the scrapping of the tax," said Zhang Haoliang, head of a nongovernmental poverty research organization based in the county.

He said the farmers have become active in supporting rural infrastructure projects, now that they are now free of the tax levies and encouraged to have a say. Previously, they were forced to participate in such projects, and many were charged nearly 300 yuan (US$36) a year.

Zhang said that in his county, more than half of the 500 villages cannot be reached by road and nearly one-third of its 630,000 residents do not have access to clean drinking water.

Wang Yong, a researcher with the Chinese Academy of Social Sciences, is encouraged by the trend, but warns that if the "one issue, one discussion and vote" practice is abused by local governments, the burden on farmers will once again increase.

"So what we need to do is to ensure the entire decision-making process is open and transparent, to reflect the willingness of farmers in a community," said Wang.

(China Daily April 18, 2005)

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