China to scrap oldest tax on farmers' crops

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Last updated at: (Beijing Time) Wednesday, March 10, 2004

China to scrap oldest tax on farmers' crops

Before Confucius, before the Great Wall, before chopsticks, it was a part of China: a tax on farmers' crops. Now this vestige of feudalism, established 4,000 years ago during the Bronze Age, is headed the way of the emperors.

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The Chinese government's plans to abolish the tax within 5 years are being lauded by some as history-making, but at the same time dismissed by others as a mere gesture for a neglected sector that provides cheap migrant labor for the factories and construction sites of the booming cities.

China had an agricultural tax as early as the Xia Dynasty around 2200 B.C. The tax was a principal source of revenue for subsequent dynastic governments, but has now winnowed to about 3 percent.

Last week, at the opening of the 2004 session of China's annual legislature, the National People's Congress, Premier Wen Jiabao said the government would pay hiked new attention on the countryside and eliminate the tax for good.

"We must take more direct and effective policies and measures to strengthen, support, and protect agriculture and increase rural incomes," the premier said.

Beginning this year, the 8 percent agricultural tax rate will be reduced gradually until it is scrapped entirely within 5 years. Only tobacco will still be taxed. The move is expected to cut financial burden on farmers by $580 million annually.

In Beijing, congressional delegate Wen Lihua from China's Southeastern ZheJiang Province called the move "a very important and historic piece of news."

"It will, in effect, lift a great burden from a large number of people," Wen said as he stood outside the Great Hall of the People, the day after the announcement. Farmers' burdens are high on the government's mind as it pushes its efforts to create a "well-off society", said the delegate.

Ensuring that Chinese farmers can make a living by tilling the land is important because of China's history of famine. It considers self-sufficiency in grain as pivotal to national security . Abolishing the tax is seen as a direct message to farmers that the government is paying attention.

"It is clearly a positive step," said Dwight Perkins, a professor of political economy at Harvard University in the United States. "Getting rid of the taxes is part of the effort of the government to do something about the increasing gap in income between the cities and the rural areas."

Other analysts said the abolition is long overdue and a symbolic gesture with little real impact.

Li Ping, a staff lawyer with the Rural Development Institute in Seattle, an expert on Chinese agriculture., said: "Even if this agricultural tax policy were fully implemented, the net result would be roughly a reduction of 40 yuan (or $5) per farmer per year."

Removing the tax will barely impact the gaping income disparity between farmers and urban residents, Li said. Per-capita income for farmers in 2003 averaged $317, while city dwellers make nearly $1000 per year per person.

Even after the tax is completely phased out, there is no guarantee that farmers will not be slapped with other fees, Li added: "Village bosses can always find an excuse to collect money from farmers."

Source: agencies

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