Authorities in Tianjin have waived the special administrative fees previously levied on the self-employed to help spur the development of private enterprise.
Tianjin's municipal government last month abolished two administrative fees targeting the self-employed the Market Management Fee and the Self-Employer Administrative Fee.
Before that, the self-employed paid 1 to 2 percent of their sales volume to the government to cover the administrative fees, in addition to taxes.
Under the new system, they will only pay a 20 yuan ($2.5) registration fee to the city's industry and commerce authorities.
The municipal government promised that the new system would not affect funding for the industry and commerce department, which derived revenue from the fees under the old system.
Li Changying, a professor at Nankai University's Institute of Economics, said the measure would provide a big impetus to the city's non-public economic sector.
"It will reduce the burden on the self-employed and ease their risks," Li said. "It will also lower the threshold to entering the market and encourage people to start business, creating more employment opportunities."
Tianjin is the third province-level region in the country to cancel the fees, following Sichuan Province and Beijing.
Beijing eliminated the fees in October last year, representing payments worth about 300 million yuan ($37.5 million) every year.
An administrator at a market in Beijing said an average self-employed person has saved about 4,000 yuan ($500) per year since the fees were cancelled.
China created the administrative fees for the self-employed back in 1983.
"The administrative fees on the self-employed should be immediately eliminated nationwide," said Zhou Tianyong, a professor at the Central Committee's Party School of the Communist Party. "They are unreasonable and discriminative."
He said the fees were a form of discrimination against self-employed people. State-owned, foreign and private enterprises do not have to pay such fees.
He said the unfavorable business environment created by the fees had gradually reduced the number of the self-employed people in the market.
Zhou said there were 31.6 million self-employed people in China in 1999, compared with the current 25.8 million.
"Many of them had to abandon their businesses because they could not afford the heavy fees and fines," he said.
"More than 20 governmental departments have administrative power over them, charging fees and imposing fines of various sorts."
Zhou said industry and commerce authorities generally do not receive much financial support from the government, so they rely on administrative fees to cover their operations, creating incentives for corruption.
For example, in some places, illegal businesses have been known to receive official recognition after handing over large administrative fees.