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Rural China on Beijing Review
Special> The Third Plenary Session of the 17th CPC Central Committee> Rural China on Beijing Review
UPDATED: October 10, 2008 NO.4 JAN.26, 2006
End of an Era
The 2,600-year-old agricultural tax is finally abolished
By FENG JIANHUA
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As mentioned above, because the agricultural tax was the most important part of the governments' revenues in some less developed areas, now that it is repealed, grassroots governments may encounter severe challenges. Currently, debts at township and village levels amount to as much as 600 billion yuan ($75 billion), but China still lacks an effective method to solve this debt and curb fiscal risks.

In some impoverished areas in western provinces, most township and county governments have to earmark a large proportion of the budget for salaries. Therefore, although the Central Government will increase the transfer payment to these regions after the agricultural tax exemption, daily administrative expenses are still a problem. Thus, without a large-scale institutional reform focusing on government streamlining, it's still possible for farmers to once again be subject to all kinds of arbitrary charges. Based on past experience, the agricultural tax is not the major burden on farmers' shoulders, but rather various fund collections in the name of agricultural tax.

As a matter of fact, this problem has already emerged in some places. For example, in some counties in Henan Province, although farmers have been exempted from the agricultural tax, they are asked to pay considerable fees for various certificates, such as marriage certificates and permits for working in cities. Local governments take these off-budget revenues as compensation for administrative fees.

Another problem is that even if the Central Government means to increase the transfer payment to rural areas, it may face pressures from other aspects, which is likely to result in the failure or ineffective implementation of the budget plan. The major reason is that farmer representatives have very limited seats in the legislative institutions in charge of affairs related to the fiscal budget-people's congresses at all levels. In this case, farmers' rights and interests are seldom taken into consideration when it comes to the distribution of the fiscal budget. Therefore, it is suggested that more seats should be reserved for farmer deputies, as only when farmers are entitled to have a say in local fiscal budgets can the Central Government's supportive measures to agriculture become effective.

However, it is indicated by a number of experts that it's out of the question for the state to provide subsidies to farmers, as China has too large a population engaged in agriculture. So far, the most effective way to solve problems involving agriculture, farmers and rural areas is to transfer more farmers from the farming sector to non-agriculture sectors and from rural to urban areas. Therefore, the Chinese Government is faced with an immediate task to remove barriers between rural and urban areas, so as to ensure rural residents equal rights with urban residents.

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