China imposes tax on condoms to tackle population decline
For the first time in three decades, China will implement a value-added tax on contraceptives, such as condoms, to counteract declining birth rates that could hinder economic growth.
According to the revised VAT law, consumers will now be charged a 13 percent tax on products that were previously exempt since 1993, when China's one-child policy was enforced and the use of birth control was strongly promoted.
Simultaneously, the revision offers new incentives for potential parents, including VAT exemptions for childcare facilities, ranging from nurseries to kindergartens, along with services for eldercare, disability assistance, and marriage-related services.
These adjustments will come into effect in January.
These actions indicate a significant shift in policy, as an ageing China transitions from limiting births to promoting larger families. The population has decreased for three consecutive years, recording only 9.54 million births in 2024, which is approximately half of the 18.8 million births noted nearly a decade ago when the one-child policy was abolished.
In reaction, Beijing has rolled out various pro-natalist strategies, including financial incentives, enhanced childcare options, and extended maternity and paternity leave.
China's attempts to increase its birth rate face a significant obstacle: the cost of raising children is among the highest in the world, according to a 2024 report from Beijing's YuWa Population Research Institute.
"Eliminating the VAT exemption is mostly symbolic and unlikely to significantly affect the larger situation," stated Mr. He Yafu, a demographer at YuWa. Instead, "it signifies an attempt to create a social atmosphere that promotes childbirth and decreases abortions."
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