Zhu Rongji/China -- (reforms of rural tax/education)

Asked about the government's moves to convert rural fees into taxes, Zhu said China currently collects 30 bln yuan each year in agricultural tax from farmers, while a further 60 bln yuan comes from contributions from counties and funds raised by villages. Local governments also collect unauthorised fees from farmers. In total, 120 bln yuan or more is taken from farmers each year, he said. The conversion of rural fees into taxes would raise the annual revenue from agricultural tax to 50 bln yuan from 30 bln, since the rate of this tax will be raised to 8.4 pct from 5 pct. Meanwhile, the other payments which currently amount to 60 bln yuan per year, as well as the unauthorised fees, would no longer be collected. The central government would make available an additional subsidy of 20-30 bln yuan to address the shortfall caused by the reduced collection, but even after this there may still be a shortfall, he said. To solve this problem, the government will reform education in the countryside, he said, noting that revenue from the existing fees is largely spent on education. Zhu said the government is determined to press ahead with this reform and ensure that compulsory education will be made available everywhere in the countryside. He noted that the educational reforms will be aimed at making more efficient use of resources, adding that if financial resources prove insufficient to fund rural education, the government will come up with more resources to invest in this area.

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