Farmers in the greater Beijing area will be exempted from the agricultural tax and all other duties starting this year, creating a zero-tax structure for agricultural production. Local farmers may benefit to the tune of some 80 million yuan (US$9.7 million).

Zhang Fengfu, deputy director of the Beijing Municipal Agricultural Committee, reported that the total tax burden of local farmers amounted to 90 million yuan last year. The 3.3 million farmers paid only 27.3 yuan (US$3.3) per person for the year rather than the 82.6 yuan (US$10) that was levied before the tax-for-fees reform, a policy that lightened rural residents' tax burdens by abolishing some charges.

In 2003, the Beijing municipal government launched its pilot tax-for-fees program pursuant to policies of the central government. As part of the plan, the number of townships in the greater metropolitan area was cut 25 percent, to 193 from 257, and the cadre headcount at township and village level reduced by 20 percent and 22 percent, respectively. Beijing's 13 suburban districts and counties report that they are now getting subsistence allowances for the needy to 66,688 farmers in 34,544 households; 400,000 farmers drew pensions; and 1.4 million participated in the new cooperative medical care plan.

This year, Beijing will resolve the problems that arose with the implementation of the tax-for-fees policy. Meanwhile, rural social welfare and financial support to the grassroots levels of government will be strengthened by all related organizations. Rural infrastructure investment will also be raised.

Zero agro tax must remain localized

The agricultural tax exemption is good news for greater Beijing's 3 million farmers. Shanghai, Zhejiang, Jiangsu and some other places have already abolished the tax, which had been levied on farmers for more than 40 years. But the time is not considered ripe for the whole nation to enjoy such a policy.

The Beijing municipal government decided to rescind the tax in light of the city's economic development. While the State Council has not issued any orders for the whole nation to follow suit, it has suggested that the tax be reduced further or eliminated in areas where conditions allow.

The agricultural tax accounts for less than 1 percent of all tax revenues in Beijing. The exemption will not only reduce the burden on farmers, but also that on the tax collection departments: the normally high costs of collecting taxes in rural areas should be cut by 30 percent.

The State Administration of Taxation reports that nationwide revenue from the agricultural tax was 33.8 billion yuan (US$4.1 billion) last year, accounting for less than one-seventh of all tax collected.

Agricultural tax revenue is declining as urbanization speeds up and the number of farmers drops. The relative weight of the tax tends to decline moving from west to east across the country: while it is still essential to government revenues in the west, it has become far less important in the developed coastal regions. The time is not yet ripe for agriculture-dependent provinces to abolish the tax.

(China.org.cn by Unisumoon March 3, 2004)