China will exempt agricultural tax for its farmers across the country in 2006, two years ahead of schedule, Premier Wen Jiabao announced Saturday in his annual government work report to the country's top legislature.

"The agricultural tax will be exempted throughout the country next year, which means what had been targeted for five years will be achieved in just three years," Wen told the annual full session of the National People's Congress (NPC) that opened Saturday.

The premier told the law makers that his government will speed up the nationwide process of agricultural tax reduction, exempt the tax in 592 counties included in the national poverty relief program and do away with livestock taxes all over the country before the end of this year.

"Revenue decreases in local budgets incurred as a result of taxed reduced or exempted on agriculture and livestock will be offset principally by transfer payments from the central government," the premier said in his report.

This will involve an additional 14 billion yuan (about 1.7 billion US dollars) from the central budget this year and will bring the total expenditure to 66.4 billion yuan (some 8 billion US dollars), he added.

The government first declared to phase out the centuries-old levies during last year's annual NPC session, at which Premier Wen pledged to reduce the overall agricultural tax rate by more than one percentage point each year, and rescind the levy in a matter of five years.

To date, 26 of China's 31 provinces, municipalities and autonomous regions have announced termination of all agricultural taxes before the end of this year, when about 730 million farmers will have been relieved from the levy, said Fan Xiaojian, vice minister of agriculture, at a recent work conference in east China's Shandong Province.

The five localities that will continue to charge agricultural taxes, including the provinces of Hebei, Shandong, Yunnan and Gansu, and the Guangxi Zhuang Autonomous Region, will reduce taxes by at least 2 percent this year, according to Fan.

For Chinese farmers who have for centuries had to pay taxes based on the number of their family members and cropland acreage, the news is no doubt a boon.

"In Jilin Province, northeast China, the tax exemption released the farmers' tax burden by 1.4 billion yuan (170 million US dollars) last year, an average 100 yuan (12 US dollars) for each farmer," said A Nuhan, an official from the Mongolian Autonomous County of Qian'an in the province.

Besides the tax exemption, the Chinese government has also worked out a series of other agriculture-friendly policies to boost rural economy and increase the farmers' income, including direct subsidy for grain growers and more subsidies for farmers to buy improved crop strains, agricultural machinery and tools.

Official statistics show that these preferential policies brought 45.1 billion yuan (5.4 billion US dollars) of direct economic gains to China's 900 million farmers last year. The National Statistics Bureau acknowledged the average income for China's farmers rose 6.8 percent in 2004, the highest in seven

years.

The central government's resolve to boost farming and increase subsidies also fired the enthusiasm of grain growers. Last year, China's grain output reached 469.5 billion kilograms, up 9 percentover the previous year.

"I hope the government will go on with its supportive measures so that farmers can have a bulging money bag and a better life," said Xu Dequan, a NPC deputy from central Henan Province during an interview with Xinhua Thursday.

An official with the State Council, China's Cabinet, confirmed Friday that the country will continue supporting agriculture, farmers and rural areas this year, a major issue with a bearing on China's efforts to build a "harmonious socialist society".

In 2005, government departments at all levels around China are expected to allocate at least 200 billion yuan (some 24 billion US dollars) for farmers' benefits, or an average 222 yuan (27 US dollars) for each of the 900 million farmers.

Meanwhile, the central coffer has budgeted training courses on agro-science and technology to approximately 100,000 farmers in 100 counties nationwide, with a hope of helping 2 million farmers acquire basic knowledge in science and technology to promote agricultural production.

On the other hand, the government will work to improve education, health and cultural undertakings in rural areas so that residents there can enjoy more social welfare benefits.

Premier Wen Jiabao pledged in his government work report Saturday that issues concerning agriculture, farmers and the rural areas constitute "top priority of all our work".

"With China's agriculture-friendly policies in place, I feel it's an honor to be a farmer," said Xin Xiyu, a NPC deputy from central China's Hubei Province. Tax exemption, subsidies and other preferential measures have helped the 53-year-old woman farmer and many of her rural peers become well-off by breeding livestock and running other businesses.

For Xin, the preferential treatment is more like the "emancipation of mind" for Chinese farmers who have lived under financial and psychological burdens for ages.

She said the tax-free rural areas are full of promises, "as long as you have the wit and know your stuff."