China to hike tax on condoms in attempt to boost falling birth rate | China
China is preparing to impose a value-added tax (VAT) on condoms and other birth control methods for the first time in three decades as it seeks to increase its birth rate and modernize its tax laws.
From January 1, condoms and birth control pills will be subject to a 13% VAT rate; Goods have been exempt from this tax since China introduced nationwide VAT in 1993.
The measure in question was included in the VAT law adopted in 2024 with the aim of modernizing China’s tax regime. VAT accounts for approximately 40% of China’s total tax revenue.
After implementing a strict one-child policy for more than 30 years, China has begun implementing a series of “carrots” to encourage people to have more children in a bid to boost its falling birth rate over the past decade.
In addition to increasing the limit on the number of children allowed per couple to three, provinces are also experimenting with offering discounts on in vitro fertilization treatment and cash grants for extra children. To encourage people to get married, some local governments offer extra days of paid leave to newlyweds.
However, the fact that condoms and birth control pills will become more expensive has been ridiculed on social media. “What is it with modern society? They really go to extremes just to make us have children,” one user on Weibo wrote.
The new VAT law also includes tax deductions for child care and “marriage establishment services”.
This year the government also allocated 90 billion yuan ($12.7 billion) to its first nationwide child care subsidy program, offering 3,600 yuan annually for every child under three. On Saturday, she announced plans to expand the national health insurance program to cover all birth-related expenses.
But the incentives had little impact. In 2024, the birth rate was 6.77 per 1,000 people; While this is a slight increase from 2023, it is still well below historical levels. The increasing death rate caused by an aging population means that China’s population has been declining for at least three years.
There are now concerns that authorities may resort to “sticking” to achieve the national policy target of more babies.
Women in some areas reported receiving phone calls from local government officials regarding their menstrual cycles and childbearing plans. Chinese media in December reported Women in a county in southwestern China’s Yunnan province were required to report the date of their last menstrual period to local authorities. The local health bureau said data collection was necessary to identify pregnant women and expectant mothers.
Responding to the news, a social media user wrote: “Today they want all women to report their period, tomorrow they will report the time of sexual intercourse, the day after tomorrow they will call to encourage sexual intercourse during ovulation… [this is] mass reproduction.
Increasing taxes on condoms is a largely symbolic move. The price of a typical condom package ranges from 40-60 yuan ($5.70-8.50). The monthly package of birth control pills that can be purchased from the pharmacy varies between 50-130 yuan.
“It makes sense to re-tax contraceptives as China’s birth policy has shifted towards encouraging births and no longer supports birth control,” said He Yafu, an independent demographer in Guangdong province. “But this measure is unlikely to have a significant impact on increasing the fertility rate.”
Yun Zhou, an assistant professor of sociology at the University of Michigan, said the new tax is unlikely to affect people’s decision-making, but it does show “what the desired family behavior should be” from the government’s perspective. Zhou added that if access to birth control becomes more difficult, “the brunt of the adverse effects will be borne by women, especially disadvantaged women.”
China’s plan to modernize its tax system includes translating taxes previously governed by administrative regulations into law. But while cash-strapped local governments desperately need the revenue, some of whom are struggling to pay the child care subsidies they promised, a condom tax is unlikely to bring in significant amounts of money.
Lee Ding, director of Dezan Shira & Associates, an Asia-focused professional services firm, estimates that a tax on contraceptives would bring in an additional 5 billion yuan annually; This is a drop in the ocean compared to China’s overall public budget revenue of 22 trillion yuan ($3.1 trillion). “We do not believe that the primary motivation behind the application of VAT on contraceptives is to generate revenue,” Ding said.
Additional research by Lillian Yang
