Cuts in agricultural tax good for entire country
By Hua Hua (China Daily)
Updated: 2004-03-09 16:57

In delivering his government work report on Friday, Premier Wen Jiabao received the loudest and longest-lasting applause when he announced that from this year on, the agricultural tax rate will be reduced by more than one percentage point annually, and the tax will be rescinded in five years.

The policy was not only applauded in the Great Hall of the People, where the National People's Congress is holding its annual session. Media coverage over the past several days indicates the applause has been thundering right across this vast country, especially among rural people.

It is indeed an unusual step for the government to be putting an end to a tax that has been in existence since 1958. It demonstrates that the government is highly concerned with the interests of rural people, and it is highly responsive to the changing situation in the country.

The slow growth of rural people's income has become an increasingly prominent problem, and the ever enlarging income gap between rural and urban areas has become a serious social problem threatening the healthy development of the national economy as a whole.

China has recorded significant economic achievements in recent years, and it is advancing at full speed towards the goal of building a "xiaokang," or well-off, society. But it can never claim success if the 768 million rural people lag behind and are excluded from benefits brought about by economic progress.

The current situation does not foster optimism. Last year, the income growth of urban residents exceeded 8 per cent, while that of rural residents was only 4 per cent.

Ever since the founding of the People's Republic of China in 1949, industry has enjoyed priority over agriculture. And policies have been tilted in favour of urban development.

It is high time for urban areas to compensate rural areas for their sacrifice and contributions over the years.

Current taxes and fees are still a heavy burden on rural people. The profit margin for farming has been shrinking and some farmers are even experiencing losses.

In Hunan Province, which is one of the country's key rice production bases, for example, the tax-inclusive cost for producing every 50 kilograms of rice is around 58.54 yuan (US$7). Farmers lose 12.77 yuan (US$1.50) on every 50 kilograms of rice they produce.

Low gains and even drops in grain planting have hurt the interests of rural people and dampened their enthusiasm to continue farming. It is no longer a rare phenomenon for farmers to give up grain planting and let their farmland lie idle. Such a trend, if it continues, could lead to a major threat to grain sufficiency in the country.

The country's grain output, in fact, has suffered a continuing decline over the past five years. In 2003, grain yield was 431 million tons, compared with 512 million tons in 1998. The decline in output has led to a shortfall of 25 to 35 million tons annually.

It is not hard to measure the significance of grain sufficiency for a country with 1.3 billion people.

This explains the heightened attention of the central authorities, who have drafted a series of aggressive policies targeting problems in agricultural development.

Early last month, the Central Committee of the Communist Party of China and the State Council issued a special paper, titled "Document No 1 for 2004" that focuses on how to energize agriculture and resolve the problem of the slow growth of rural people's income.

After experiments in some areas, the taxes on special agricultural products, except for tobacco, will be lifted completely nationwide beginning this year.

We believe that these practical efforts and wise policy decisions will help improve the situation in rural areas and in the country as a whole.

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