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Tax-for-fees Reform Ensures More Money in Farmers' Pockets
The 900 million Chinese farmers probably see a rosy future in sight, as a massive campaign yet to spread across the country promises them a lighter tax burden and more money in their pockets.
China, a traditional agricultural country boasting the world's largest rural population, recently kicked off tax-for-fees reform to abolish assorted fees and charges for farmers.
It is generally believed, from top officials and scholars to farmers, that the reform will unveil a new look for China's rural areas.
Chen Xiwen, China's top advisor on rural policies, said he expects the tax-for-fees reform to kick off a new round of changes in rural China, just like the adoption of the significant contract responsibility system based on household management 20 years ago.
Chinese Premier Zhu Rongji ranks the reform among the top tasks for the government this year. "If the reform achieves success, China will have a sound agricultural base, a stable rural area, and a better foundation for the development of the national economy."
The reform has already started on a trial basis in east China's Anhui province, which is coincidentally the home to several historic land reforms featured with the contract responsibility system based on household management that changed the rural economic structure in China.
Upon the completion of the tax-for-fees reform, Chinese farmers will hand in 50 billion yuan of agricultural tax plus no extra fees, compared with 30 billion yuan in tax in the past, with 60 billion yuan in fees to village-level administrations and some 30 billion more wantonly levied by local officials under assorted names.
Despite the fact that an estimated 60 to 70 million farmers have migrated into cities for jobs, the majority still make a living from farming. Issues for farmers and rural areas have always been on top of the agenda for China's policy makers.
Chinese farmers earn only 39 percent of urban dwellers annually due to slow agricultural development, and to make things worse, farmers have the burden of tax and fees that accounts for one tenth of their incomes.
Farmer Zhou Chunpei in Wangjiang county in Anhui province was overwhelmed with joy on hearing that he has to pay less tax this year, as the total he paid for his five-member family dropped from 653 yuan to 479 yuan last year. Zhou once thought of deserting his land as it earned too little.
More and more farmers will benefit from the reform, which will spread to the rest of China this year and conclude in 2002.
To help guarantee education quality and funds for public expenditure that are inadequate as a result of fee cuts, the central government plans to allocate 20 to 30 billion yuan as subsidies.
The launching of the reform first of all will effectively check the rampant trend of concocting excuses to levy charges.
In Anhui, up to 50 assorted fees and charges like the fee on pig-slaughtering and road construction were removed last year, as a result of which farmers paid 31 percent less in tax and fees.
Extensive implementation of the reform is also expected to improve the relations between farmers and officials.
In Anhui today, farmers queued to pay tax instead of dodging fee-levying officials and hiding to delay fee payment in the past, and some even sent cash back home for tax payments from cities where they are working.
With more income and expenditure, farmers can now increase investment in farming production to promote productivity, said Xu Xiaoqing, an agricultural specialist with the Research and Development Center under the State Council.
Actually, boosting farmers' incomes is deemed the most direct way of stimulating rural market. "If China wants to keep its economy on the track of rapid development through the current proactive fiscal policy and expanding interior demand, farmers' incomes have to be raised, as they are the largest consumer group," a well-known economist Wen Tiejun said.
But the reform brings more than that. Luo Fuhe, a member with the National People's Congress (NPC) Agricultural and Rural Affairs Committee, argued that the reform "will have a significant bearing on the rudimentary democracy in the vast rural areas," as farmers will have their opinions respected before the decision is made on things like where to spend the money.
NPC deputy Zhu Yunkuo, a farmer, said, "The reform lets us know that our money has been turned over to the state rather than to someone's pockets."
In the eyes of academicians, however, tax-cuts are only the first step in raising farmers' incomes.
"It's hard to realize sustained growth in farmers' income simply by relying on 130 million ha of cultivable land or developing rural enterprises," Chen Xiwen said. "The ultimate answer lies in the urbanization of rural areas."
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