China economy may grow 4 times faster than EU, Japan
(Bloomberg)
Updated: 2005-12-30 16:09

Tax Cuts

Raising domestic demand will be one of the key tasks for the government over the next five years, according to a blueprint for economic development issued by Chinese goverment in October. Farmers' taxes are being abolished, civil servant salaries are being raised and spending on education and healthcare is being increased.

A 2,600 year-old agricultural tax will be abolished from Jan. 1 following trials in some provinces in 2004, the Xinhua news agency reported today. The pilot projects saved farmers some 50 billion yuan ($6.2 billion) in taxes that year, the agency said.

Retail sales next year will increase by about 13 percent, matching the pace of growth in 2005 and 2004, according to Yao from the statistics bureau.

"The consumer has been spending a lot -- car sales are recovering and tourism numbers are off the charts," said UBS's Anderson.