Research On The Agricultural Tax System And Its Impact On The Income Of Our Country’s Farmers

Problems of agriculture, countryside and farmers are concerned with the party and national career’s development, which has always been the Government’s top priority, and farmer is the crux of the problem of "three agriculture". Increasing peasants’s income and raise farmers’living standards is the key to solve farmers’ problems. In order to achieve this objective, meanwhile the Government takes efforts to improve the income of farmers, also attaches great importance to the farmers, such as the abolition of agricultural tax, which is one of the most important of these initiatives. On January 1,2006, China has abolished the agricultural tax regulations, eliminated taxes on special agricultural products except tobacco, exempt from all taxes on animal husbandry, which annually reduced the burden of farmers up to 133.5 billion yuan, and to China’s 900 million farmers, was undoubtedly a positive message, reducing the burden of farmers, increasing the disposable income of the farmers. However, accompanying a major misunderstanding that Chinese farmers don’t having to pay agricultural taxes, farmers have no any tax burden. And indeed, farmers assume two major tax burden, one is direct tax burden due to engaging in agricultural production, another is indirect burden, which is included in the purchased fertilizer, agricultural machinery and film in the agricultural production operating process, such as VAT, city maintenance construction tax, and business tax assumed in the agricultural products transportation, etc.. The abolishment of the agricultural tax on farmers has declined their direct tax burden, but indirect taxes for farmers still remain, and which will certainly affect the further promotion of farmers’ income.This research is based on the existing tax theory research, from discussing the effect on agricultural development and improvement of farmers’ income of our country, through main taxes, VAT, business tax and income tax, whose preferential policy on agriculture, analyse agricultural tax system evolution and the impacts on farmers income. And taking Shanghai part area as examples, this paper analyses the agricultural products production, circulation, costs of sales and tax burden, evaluating the long-term policy effects of agricultural production in the implementation of preferential tax policies to find factors that affect agricultural development and increase farmers’ income. In addition, through the comparison of the system of agricultural tax system of China with developed countries, it explores the gaps at home and abroad so as to provide reference for further optimization of the agricultural tax system in China. Finally, through analysis this paper seeks to further reform and improve the agricultural tax system in China and main countermeasures, and make relevant policy recommendations.Through in-depth discussion of existing agricultural tax system in China, the study found that under the current VAT system, farmers sell their own production produced by themselves can be exempted from value-added tax, but the VAT included in the purchase of production, because the farmer cannot deduct, they still need to burden. According to the interested parties’ calculation, in the 2008 year farmers’ burden in the purchase of means of production processes, such as VAT, at between 400 billion and 500 billion yuan, farmers’ per capita tax burden was more than 200 Yuan. In addition to VAT, farmers’s purchase the means of production also included the urban maintenance and construction tax and education expenses surtax and a number of other taxes and fees. And recently years national policy on agricultural means, such as feed, and film, and implements, fertilizer, pesticide, seed, and seedling and so on, from production to sales links series of relief rebate policy. Supposed the sales price of agricultural film, implements and fertilizer should be declined, but indeed price didn’t be reduced, benefits of tax generated no real benefits to general farmers, and the government tax relief provided the real profit to the production manufacturers or dealer, therefore farmers’ income has no clear improvement.Taking Shanghai Jiading, Chongming, and Fengxian area for cases, the research on the costs of agricultural products production, circulation, sales links, and tax burden found that the cancellation of agricultural tax, and duty-free policy of VAT on farmers’ agricultural production made farmers have no directly tax burden in agricultural production, farmers income had improve. As for the indirect tax which farmers assumed due to purchase the means, Government also through duty-free policy on production agricultural machinery, film and fertilizer enterprises reduced indirect tax assumed by farmers. And meanwhile, Government through reliefing VAT on part agricultural products in wholesale and circulation links reduced indirect tax, and increased farmers’ income, but, through case analysis, this study found that the implementation effect of preferential policy of VAT was not enough ideal. In theory, the production cost of agricultural means price should decline, farmers of agricultural production cost should have clearly reduced, but in reality farmers’ production cost has no clear decreasement, farmers’ income has no enough clear improvement, farmers are difficult to benefit from these preferential policy of indirect tax.Compared with many developed countries, on the one hand, they provide protection and concessions in agricultural policy, in respect of income tax and sales tax, they also provide very favourable treatment, so really reduce the agricultural tax burden on farmers and consumers in a truly affordable methods. Such as the Netherlands, tax exemptions are given to agricultural producers of primary products, and allows agricultural producers enjoy 5.1% fixed input tax credit, that if agricultural producers purchase agriculture-related products, they can get to their invoice total amount 5.1% rebate offers, making implementation of preferential tax policies really affordable to farmers and effectively increasing the peasants’ income.Based on the above study, this article makes the following policy recommendations that VAT "huinong" policy should be concentrated, change agricultural products processing’s "highly collection and lowly credit" phenomenon, expand range of agricultural products, achieve agricultural products export zero tax, increase business tax’s agricultural preferential policy, expand the pilot range of replacing business tax by VAT, improve the effect of implementation of agricultural tax preferential policy, strengthening on the direct subsidies to farmers, and break the duality system on citiy and countryside, gradually unify the tax system of urban and rural.