China's 2,600-year-old agricultural tax will no longer exist as of Jan. 1, 2006, according to a decision of the national legislature which approved a motion on abolishing the regulations on the tax Thursday.
Agricultural tax emerged in China as early as in the Period of Warring States (475-221BC). And then, agricultural taxes were collected in almost every feudal dynasties.
In 1958, the NPC adopted the Regulation on Agricultural tax.
Feng Shuping, vice director of the Commission for Budget Affairs under the NPC Standing Committee said since the founding of the People's Republic of China in 1949, the Chinese government had always upheld the principle of increasing grain output, but reducing taxes.
In 1949, a Chinese farmer should bear grain tax as much as 28 kilograms a year, while the figure reduced to 13 kilograms in 2000, although the annual grain output increased remarkably during the time.
She said abolishing agricultural tax would help reduce farmer's economic burden, increase income and sharpen the country's agricultural competitive power.
In March 2004, Premier Wen Jiabao announced in his annual government work report that the Chinese government would reduce agricultural taxes year on year and finally exempted it.
Since then, 28 provinces have decided by themselves to exempt agricultural taxes, reducing tax burden worth of 50 billion yuan for 800 million farmers.
Government's endeavor of reducing and exempting agricultural tax has accumulated experiences for the country's top legislature to finally root out the category of agricultural tax, Liu said.
He said the economic losses caused by agricultural tax abolishment was within the country's fiscal capacity.
Statistics show that in 1949, agricultural tax revenue took up to 39 percent of the country's total tax revenue, the percentage dropped to merely one percent in 2000. In 2005, the Chinese government only collected about 1.5 billion yuan of agricultural taxes. Therefore, rooting out agricultural taxes could not influence the country's financial revenue too much, he said.
He said abolishing agricultural taxes will reduce the local fiscal revenues. For the economic well-developed provinces, the losses caused by rooting out agricultural tax will be burdened by themselves, for those backward western provinces or grain produce bases, the central government arranged 35.66 billion yuan to subsidize them in 2005.