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Han Jun

In the past two years, various regions and departments have been studying the new developments and new problems emerging after agriculture and rural development entered a new stage. They have also conscientiously been implementing the Party’s principles and policies in the countryside, mobilizing the enthusiasm of the peasants and making new progress in agriculture and the rural economy. As a result, initial achievements have been made in agricultural restructuring, the quality of farm products have improved tangibly, and the production of main farm products has further shifted to the regions that enjoy competitive advantage. The construction of agricultural infrastructure and the improvement of the ecological environment for farming have expedited. Rural reform has deepened, and the rural market economy has gradually improved. The peasants are having more ways to increase income and have seen their income grow to a certain extent. As a result, the rural society has been stable. However, it should be pointed out that the difficulty for peasants to increase income remains the biggest problem confronting agriculture and rural work, some long-term fundamental factors impeding the growth of peasant income are yet to be removed, and the widening of the income gap between urban and rural areas and between different regions has not been reversed. Increasing peasant income remains the starting point for agriculture and rural work. Therefore, it is necessary to further adjust the relevant policies and deepen the rural reform so as to enable a fairly fast growth of peasant income.

I. Further Improve Rural Tax Reform and Truly Ease Peasants’ Burden

To ensure that the reform of rural taxes and administrative charges can achieve the expected goals, the plan for the reform of taxes and administrative charges must be further improved and supporting reforms must be actively promoted. First, agricultural tax collection should be improved in line with the principle of fairness. We suggest that under the precondition of collecting unitary tax, the method of agricultural tax calculation and collection should be improved, say, on the basis of integrated population and land calculation. For example, agricultural tax can be collected on a "50-50 basis for people and land". Second, the agricultural specialty tax should be abolished as soon as possible. Although the existing stipulations provide that the agricultural specialty tax and the agricultural tax cannot be repeatedly collected for the same land, the agricultural specialty tax has virtually become a new channel to increase the burden of the peasants due to the lack of regulations and constraints. In addition, collecting agricultural specialty tax is inconsistent with the goals of promoting structural adjustment of agriculture and of increasing the competitiveness of agriculture on the international market. Third, it is imperative to contain the continuous growth of bad debts in the rural areas and gradually ease the debt burden formed for years. The borrowing behavior of the township and town governments and village organizations should be standardized so as to prevent the emergence of new bad debts. The township and village organizations should be prohibited from borrowing loans to pay taxes, fees and other charges, and high-interest borrowing should be strictly banned. The township and town governments should not be allowed to provide guarantee and mortgage for the borrowing by enterprises, or to transfer the enterprises’ debts to the peasants or collectives. The collective borrowing at the village level should be placed under the villagers’ self-government. The state should ban, instead of protecting, high-interest borrowing that is in violation of state stipulations. As to the high-interest borrowings, their principals and interests should be separated and the interests should not be allowed to turn into principals. The state or the provincial governments should work out unified interest-cutting policies, under which interests are calculated in phases in keeping with the bank interest rates. It is prohibited to force the peasants to repay debts by taking back all or part of their contracted land. The debts of some townships and villages were formed due to some institutional and policy reasons. For example, the allotted fund raising for a variety of "high-standard" construction projects exceeding the capacities of townships and villages, the call for townships and villages to create enterprises and the development of cooperative funds that are all related to the policies and appraisal pressure from the superior authorities. Therefore, the state should work out policies and give certain support in the course of easing the debt burden of townships and villages. Fourth, it is necessary to regulate the relations between education and inputs so as to truly reduce the fiscal burden of the township and town governments. The central authorities have proposed that the main responsibility for rural compulsory education should be shifted from the peasants to the government and the government’s main responsibility for rural compulsory education should be shifted from townships and towns to counties. To achieve that goal, the key step is to further adjust the management system and input mechanism for rural compulsory education. We suggest that the wages of rural primary and secondary school teachers be jointly shared by the central and local governments and be managed in a unified way by county governments. How to divide the fiscal burden between the central and the local governments can be decided in line with the fiscal capacities of different provinces. The proportion of public expenses paid from the fees charged from the students should be lowered gradually. The public expenses required for the running of rural primary and secondary schools should be mainly paid from the finances of the county and township governments. In the poverty-stricken regions, fully free compulsory education should be practised on the basis of the existing system of providing free textbooks to poor primary and secondary school students. After the reform of taxes and administrative charges, certain proportion of the taxes collected should be used for education. Fifth, the number of people supported by the finances of the county and township governments should be reduced, so as to ease their fiscal pressure. The root-cause of the continuous swelling of the county and township institutions lies in a complete separation of the reform of the government administrative system from the reform of the economic system. The emphasis of the reform of the county and township institutions should be placed on reforming their public institutions. Those departments and institutions whose functions are weakening or overlapping should be merged or abolished. Those departments that are engaged in business operations or competitive industries should be separated from administrative institutions, and diverse channels and effective carriers should be used to redirect the cadres and workers on government payrolls.

II. Increase Financial Inputs for the Small and Medium-sized Rural Infrastructure Facilities below the County Level and Further Improve the Fiscal Support System for Agriculture.

The small and medium-sized rural facilities, such as farm irrigation projects and rural roads, are the basic conditions for restructuring agriculture and increasing peasant income. According to the existing fiscal system and investment system, the responsibilities for the construction of the small and medium-sized infrastructure facilities rest on the shoulders of the county and township governments. The finance of these governments now is basically a "food finance", and are difficult to even find supporting funds for the state-invested projects. These governments almost have no ability to invest in the construction of the small and medium-sized infrastructure facilities. Construction of such facilities is in fact relying mainly on the peasants’ own fund raising and labor input. Construction of such facilities is a weak link in China’s input in agriculture. Therefore, it is necessary to gradually include the construction of the rural infrastructure facilities below the county level, such as small and medium-sized water control projects, rural roads, power and water supply, into the scope of capital construction investment of the governments at various levels. We suggest that the amount and proportion of the national debt fund used directly for agriculture be drastically raised, and bulk of such fund be used for the construction of small and medium-sized rural infrastructure facilities.

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