Nearly 90 percent of China's provinces and autonomous regions have exampted agriculture taxes. But the 900 million Chinese farmers are yet to feel happy about the tax exemption as problems, including those about money-thirsty compulsory education and financially weak governments at county and town level, are cropping up in rural areas across the nation.

China's taxation reform has entered a new stage, in which major efforts are devoted to promote renovations of township institutions, rural compulsory education system and of the fiscal regime of county-and-town-level governments, said Premier Wen Jiabao at a recent national working conference on rural taxation reform.

Only when the aforesaid problems in the post-agriculture-tax era are solved and there is no arbituary fundraising upon farmers, will China's rural taxation reform be regarded as effective and successful, experts on agricultural problems believed.

Prior to the taxation reform meeting, Premier Wen said in his government work report at the annual session of China's top legislature in early March that the Central Government will earmark 39.6 billion yuan (4.8 billion US dollars) to support local governments in their rural taxation reform, and allocate 10 billion yuan (1.2 billion US dollars) from the state's risk fund for grain production to subsidize farmers.

China began levying agriculture tax in 1958 and has since remained one of a few nations that impose such tax in the world. Such tax used to stand at some 50 billion yuan (6.02 billion US dollars), or 3 percent of China's total annual tax revenues, before the rural taxation reform started.

This year, as most of the provinces and autonomous regions abandoned agriculture tax, the tax revenue will reduce to 1.5 billion yuan (180.7 million US dollars) or so, down 93 percent from the year-earlier level.

In the wake of tax reduction and exemption in rural areas, governments at the county, town and township level, however, have been weakened financially. Usually undertaking public services in the areas, now they have more meagre treasuries to support rural compulsory education and build infrastructure projects and other facilities for public good.

Taking northeast China's Heilongjiang and eastern Anhui provinces, which are two representative agricultural production bases in China, as examples: Liabilities at every village stand at 1 million yuan (120,482 US dollars) on average in Heilongjiang, and those at each township, 4 million yuan (481,928 dollars) on average. The figures are more than 200,000 yuan (24,096 dollars) and 8 million yuan (963,855 dollars) in Anhui.

According to the Chinese Academy of Social Sciences, debts at township and village level stand at scores of billions yuan nationwide.

"We often receive court summons as we have several million yuan in debt,"said Meng Xiangui, a local party leader at Xiangyang Township of Zhaodong City in Heilongjiang."Before the taxation reform, the township government could garner two million yuan (240, 694 dollars) every year. Now we have only less than one million yuan (120,482 dollars) allocated by the Central Government. We are incapable of repaying our debts, needless to say building roads and water conservancy facilities for the farmers."

At Luotang Township Middle School in Changfeng County, Anhui Province, eight out of its shabby school houses have been discarded, with spider webs hanging on their eaves. Qiu Lin, the principal, said,"The annual work fund of 10,000 yuan (1,205 dollars) simply cannot cover our expense. And we wouldn't ask students' parents to pay more."

According to government think tanks, more than 50 percent of rural primary and middle schools report fund default currently.

"After the rural taxation reform, rural compulsory education system faced the worst difficulty,"said Han Jun, head of the rural department under the Chinese Academy of Social Sciences.

To solve the problems, renovation of fiscal regimes in rural areas are being carried out. The money used by townships is now managed by related county governments in some provinces. In some areas that conditions are ready, the Central Government allows a provincial government directly administer related counties in financial arrangements. Thus the money the Central Government allocates to support local governments will be used more efficiently.

Some government officials revealed that the Central government will tie up with provincial governments to undertake rural liabilities left over from past.

Han Jun said that the Central and provincial governments should pay more money to ensure rural compulsory education.

Currently, tax revenue grows 500-600 billion yuan (60.2-72.3 billion US dollars) annually in China. The Chinese Government is financially powerful enough to implement free, compulsory education in rural areas, according to economists from the Asian Development Bank China office.

Source: Xinhua