China's Farmers Benefit from Rural Tax Reforms

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Last updated at: (Beijing Time) Sunday, May 25, 2003

China's Farmers Benefit from Rural Tax Reforms

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Once a diehard troublemaker for local officials to deal with when collecting rural taxes, Xiao Xihai, a peasant in Wuwei County of eastern China's Anhui Province, has dramatically changed to be a model taxpayer thanks to the rural tax reforms.

Three years ago, Xiao not only refused to pay any taxes or fees,but lobbied neighboring villagers to refuse payment too.

Nowadays, Xiao is usually the first in his village to pay ruraltaxes, and following his example, 95 percent of the village's annual taxes are collected within several days.

Xiao still remembers his change of attitude in the spring of 2000, when Chinese Central Government decided to let Anhui reform its burdensome rural tax structures.

More than 40 tax categories were lifted, and households like Xiao's were required only to pay agricultural tax. Xiao's family annual tax bill dropped by 200 yuan (24 US dollars).

"Before the rural tax reforms, our villagers were weighed down by heavy arbitrary fees," Xiao said.

"Most of the tax we paid ended up in the hands of corrupt village cadres."

New rural tax reforms set the highest tax rate at 8.4 percent of farmers' output.

"We are the State's taxpayers now," Xiao claims, "anyone who dares to charge one cent of arbitrary tax is breaking the law."

Two thirds of China's 1.3 billion people live in the countryside and many of them find the double hit of low incomes and hefty taxes too much to handle.

Analysts say it is important to continue reducing taxes and other levies on hundreds of millions of Chinese peasants whose incomes have lagged behind those of city dwellers.

"It is so exciting to see peasants began to increase their awareness as the country's taxpayers," said He Kaiyin, an agricultural expert.

"Rural taxes account for a very small proportion of China's total 1.9 trillion yuan (229 billion US dollars) annual financial revenue."

"But the 900 million peasants are the largest and most important social class in the country and it is significant for social stability and economic development to standardize rural taxes."

The lifting of arbitrary fees on peasants not only changed Anhui farmers' attitudes towards taxpaying, but also eased the burden of peasants in other provinces, like Zhejiang, where peasants now pay 63 percent less following tax reforms.

"We have improved the efficiency of government at grassroots level by streamlining more than 110,000 cadres, who used to go from door to door urging peasants to pay hefty taxes and administration fees," said an agricultural industry official in Anhui Province who did not want to be identified.

The heavy burden of taxes and other levies on China's peasants has led to many clashes between villagers and local officials in recent years, and peasants say there is more work to be done yet.

peasants say rural tax collection should be more transparent, open, and just.

"We should enjoy the same rights as other taxpayers," said Xu Heqing, a peasant.

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