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China has decided to abolish agricultural tax as of 2006, three years ahead of its five-year schedule, the State Administration of Taxation said.

China's top legislature late last year adopted a motion to rescind the country's 2,600-year-old agricultural tax starting from Jan. 1, 2006.

The administration said China began to phase out agricultural tax to reduce farmers' financial burden as early as 2000.

The tax reform helped reduce farmers' tax burden by 22 billion yuan (US$2.7 billion) in 2005, and 23.4 billion yuan (US$2.8 billion) during the period from 2001 to 2004, the administration said.

Only three of the 31 provincial level areas on the Chinese mainland collected agricultural tax in 2005, while 28 others had abolished the tax.

The tax overhaul was designed to narrow the widening income gap between the rural and urban residents, including about 800 million rural people.

During the more than 2,000 years, agricultural tax was always the main source of the country's coffers. Since the founding of the People's Republic of China in 1949, agriculture has made great contribution to the country's economic development.

(Xinhua News Agency January 28, 2006)