As a NPC deputy from a poor township of Southwest China, Wang Xinqiong is to bring two pieces of breaking news from Beijing to the villagers she represents.

One is that farmers in her poverty-stricken county will pay no agricultural tax this year. The other is that rural children will benefit from free compulsory education.

"I was elated by the announcements by Premier Wen Jiabao, but at the same time, I was seriously concerned about the rural situation in poor areas if the central government's financial input is not going to be enough," Wang said.

Wang is head of Tanxi township in mountainous Pingchang County in the populous Sichuan Province. It is a county where nearly all of the towns have fallen into financial hard times.

Because of the trouble, local governments' operations have become a problem, including education, health and infrastructure construction, Wang said.

"That's the real situation in poor rural communities," said Wang.

Wen has come up with viable solutions to Wang's communities' problems.

"Revenue decreases in local budgets brought about by reduced or exempted taxes on agriculture and livestock will be offset principally by transferring payments from the central government," the premier said in his report delivered at the beginning of the ongoing NPC session.

He told legislators that the government will speed up the nationwide process of agricultural tax reductions, exempt tax in 592 poverty-stricken counties including Wang's county and do away with livestock taxes across the country before the end of this year.

The government will exempt agricultural tax for farmers throughout the country in 2006, two years ahead of schedule.

The tax-cut plan will involve an additional 14 billion yuan (US$1.7 billion) from the central budget this year and will bring the total expenditures to 66.4 billion yuan (US$8 billion).

Increasing the income of China's 768 million farmers and grain output is high on the government's agenda.

Xinhua News Agency cited Fan Xiaojian, vice-minister of agriculture, as saying that 26 of the Chinese mainland's 31 provinces, municipalities and autonomous regions have announced termination of all agricultural tax before the end of this year, which means about 730 million farmers will have been relieved from the burden of the levies.

Jiang Zhongyi, a senior researcher at the Ministry of Agriculture, also applauded the central government's efforts, which ended the country's practice of levying taxes from farmers for nearly 2,000 years.

For rural people, who currently earn an average monthly income of about 200 yuan (US$24), the timing is really good, said Jiang, a researcher of rural policy.

"To me, the most important thing is that grass-roots governments won't be able to collect other fees under the excuse of the agricultural tax," said Jiang.

Statistics indicate that the agricultural tax raises just 30-40 billion yuan (US$3.6-4.8 billion) annually, around 5 per cent of the government's financial income. But before the reform, the local governments also levied additional fees of around 100 billion yuan (US$12 billion).

He is concerned "whether the positive momentum can be sustained."

"Because the money from the central government cannot fully meet the need of local governments, I'm afraid local officials will still risk collecting fees from farmers to feed the local bureaucracy," said Jiang.

Jiang said the central government has been pressuring local governments to cut bloated grass-roots bureaucracies by forbidding them from collecting money from farmers.

"To my understanding, that's the strategy planed by China's highest leadership to streamline grass-roots governments," said Jiang.

The central government has cut its bureaucracy in 2003 but left much freedom for local governments to reform and streamline.

(China Daily March 9, 2005)