China's 2,600-year-old agricultural tax will be rescinded as of
January 1, 2006, after China's top legislature voted on Thursday to
adopt a motion on the regulations revoking the agricultural
The motion with only 94 Chinese characters was voted favorably
by 162 lawmakers and abstained by one.
Wan Baorui, former vice minister of agriculture and vice
chairman of the Agriculture and Rural Affairs Committee of National
People's Congress (NPC) told Xinhua that the abolition of the
agricultural tax demonstrates that industry has outgrown
agriculture to some extent along with the country's economic
development. And the country ushers into a new era of "industry
Official figures show that agriculture contributed to 13.1
percent of the nation's gross domestic product (GDP) in 2004, and
industry and tertiary trade contributed to 46.2 percent and 40.7
Agricultural tax, China's most ancient tax category, started to
be collected in 594 BC. From that time, agricultural tax has
existed for 2,600 years in China with dominant rural economy.
During the more than 2,000 years, agricultural tax was always
the main source of the country's coffer. Since the founding of the
People's Republic of China in 1949, agriculture has made great
contribution to the country's economic development.
In 1953-1985 period, Chinese government purchased grains, cotton
and other agricultural products with unified prices which were much
lower than the prices in free market, so as to save money for
In this way, Chinese farmers contributed 600 billion to 800
billion yuan (about US$75 billion - 100 billion) to the country's
Over recent years, the gaps between city and countryside, urban
citizens and rural residents were widened. Therefore, solving
issues concerning agriculture, countryside and farmers have turned
to be the urgent task for the Chinese government.
In 2005, the Chinese government and the Central Committee of the
Communist Party of China (CPC) vowed to construct a "new
countryside" so as to narrow the gap between city and
Wan said, the abolition of agricultural tax was only one of the
important steps to fulfill the construction of the "new
Statistics, released by the National Bureau of Statistics (NBS)
in December, showed that currently the proportion of primary,
secondary and tertiary sectors in the GDP has changed to be
"It demonstrated that the country's industry system has been in
shape and the time for industry subsidizing agriculture has been
ripe," said Wan.
Several signs have illustrated that the construction of "new
countryside" was by no means a slogan, but a top issue in
government's work agenda.
Last week, Premier Wen Jiabao announced at an executive meeting
of the State Council that tuitions for nine-year compulsory
education in rural areas will be exempted within two years. And the
central government and local governments at various levels will
allocate a total of 218.9 billion yuan (US$27.36 billion) to
subsidize compulsory education in rural areas in five consecutive
years from 2006.
In public finance sector, the government has remarkably
intensified investment in rural areas over recent years. The public
spending on issues concerning agriculture, countryside and farmers
increased by more than 50 percent from the figure for 2002.
In 2004, the State Council exempted and reduced agricultural tax
in trial in certain provinces. In 2004 alone, 50 billion yuan worth
of agricultural taxes were exempted for 800 million farmers. Or
say, the annual per capita income for Chinese farmers increased by
63 yuan, or 2.1 percent from the previous year.
Wan said the abolition of agricultural tax also sharpened the
country's agricultural competitive edge in the international
market. Giving that China has 86.7 million hectares of farmland,
the abolition of agricultural tax means the per hectare grain
production cost dropped by 570 yuan, or 10 percent - 20 percent
from the figure of previous year.
(Xinhua News Agency December 30, 2005)