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Reform to Cut Farmers' Burden
A sweeping tax-for-fees reform is expected to cut the financial burden of 620 million people - three-quarters of China's rural population - by almost a third this year, a State Council official said on Wednesday in Beijing.

Huang Weijian, vice-director of the State Council Office for Rural Tax-for-fees Reform, said: "Following the success of the tax-for-fees experiment in East China's Anhui Province over the past two years, the government has decided to broaden it to 18 other provinces and municipalities in 2002."

Under the plan, a standardized tax system will gradually replace the range of taxes, fees and levies previously imposed on farmers in the country's main grain-producing and agricultural provinces in central and western China, said Huang.

Chinese farmers have often had to pay charges in addition to legally raised taxes. Local administrations have used various pretexts to set up exorbitant fees, fund-collecting programmes and fines. This practice has put an unbearable yoke on farmers and soured relations between rural cadres and the masses, according to Huang.

"The unprecedented reform to turn fee payments into tax in rural areas is first and foremost designed to lighten the burden on farmers," Huang said.

The reform will allow farmers to pay only agricultural tax or agricultural speciality product tax and surtaxes, and abolish the slaughter tax and many other fees, such as education fees.

In addition, farmers will no longer be obliged to provide "voluntary labour services" for rural infrastructure projects, such as water works and road construction - unless the village congress approves this, said Huang.

Under the scheme, a farmer will be either levied an agricultural tax capped at 7 per cent of the farmer's monetary income or else an agricultural speciality product tax, which will be slightly higher than the agricultural tax.

Surtaxes will be charged to cover the overheads of villages and the salaries of village cadres but the surtaxes should be less than 20 per cent of the normal tax, according to Huang.

"Roughly, the reform of rural taxes and administrative charges will result in fees being reduced by an average rate of 30 per cent for farmers," Huang said. "It is safe to say that, compared with 1999, the reform will cut Chinese farmers' financial burden by up to 50 billion yuan (US$6 billion)."

The cancellation of various administrative fees formerly paid by farmers has reduced the revenue of township governments but also prompted them to carry out the thoroughgoing reform, Huang said.

Many provinces have streamlined their township governments and reduced the number of village and group functionaries receiving government subsidies.

The reform will free local officials from the need to collect fees from farmers and instead give them more time to serve local farmers, according to Chinese newspaper reports.

Chen Xiwen, deputy director of the State Council Development Research Centre, said the tax-for-fees reform represents the third significant rural revolution in China after the land reform of the 1950s and the adoption of the household contract responsibility system in the late 1970s.

In addition to financial support from the central government, local township and county governments should try to develop non-agricultural businesses to get new sources of revenue and help improve farmers' financial conditions, said Chen.

(China Daily September 5, 2002)

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