Chinese Government May Abolish Agricultural Tax

December 15, 2004

According to the China Daily and China Youth Daily , the Chinese government may reduce or abolish the agricultural tax in 2005, well before the 2009 deadline that authorities originally set to eliminate it.

Chinese farmers have attacked the highly regressive, seven percent agricultural tax repeatedly, because it reduces both their incomes and the competitiveness of their produce in national and international markets. Unlike urban residents, farmers pay taxes on the total value of their produce, with no allowance or setoff for production costs. Farmers also frequently complain about corruption and excessive tax collection.

The Chinese leadership has made reducing the rural tax burden a key element of government efforts to address rural instability and inequality between rural and urban income. A number of provinces and municipalities already have reduced or eliminated the agriculture tax in experimental programs.