The Chinese government Plans to Levy VAT for Condoms in Effort to Counter Declining Birth Rate

As part of a major legislative change, authorities are preparing to apply a value-added tax (VAT) on birth control products for the first time in three decades. This move comes as the nation attempts to boost its birthrate while concurrently modernising its tax laws.

Details of the Updated VAT Regulation

Starting at the beginning of the year, condoms and contraceptives will be liable for a thirteen percent value-added tax – a charge they have avoided since the countrywide value-added tax was implemented back in 1993.

This measure was embedded in a broader VAT law enacted last year, aimed at updating the country's tax regime. VAT currently accounts for nearly 40% of the government's overall tax income.

A Broader Context of Pronatalist Policies

After decades of a strict one-child policy, the country has, in recent times, been rolling out a suite of incentives designed to persuade people to have more children.

These measures include:

• Increasing the cap on permitted children per couple to three.
• Local governments testing subsidies for fertility procedures and financial bonuses for additional births.
• Some municipal authorities providing newlyweds extra paid leave to foster matrimony.

"What is wrong with modern society? They are truly going to extreme lengths just to make us have children," commented an individual on the social media platform Weibo.

Public Reaction and Symbolism

The idea of contraceptives costing more has been met with ridicule online. Concurrently, the new law also provides a tax deduction covering parenting costs and matchmaking activities.

Authorities have also earmarked 90bn yuan ($12.7bn) for its first nationwide childcare subsidy programme, providing yearly payments of 3,600 yuan for every toddler aged below three. Plans were also announced to broaden state medical coverage to cover all childbirth-related expenses.

Limited Impact of Incentives

However, these incentives have had minimal impact. In 2024, the birthrate was 6.77 births per thousand individuals, a slight increase on 2023 but still well under long-term averages. An increasing mortality rate caused by a greying society means China’s population has been shrinking for at least three consecutive years.

Potential Move to Coercive "Sticks"?

There are now concerns that authorities may be turning to more punitive measures to achieve the national policy goal of increasing the number of babies.

Reports have emerged of females in certain regions receiving phone calls from municipal officials inquiring about their menstrual cycles and childbearing plans. For example, women in a county in Yunnan were said to be told to disclose the timing of their most recent menstruation to local authorities.

"Today they require all women to report the time of their period, tomorrow it will be reporting the time of sexual intercourse, soon they'll be phoning to recommend sex during fertility windows… [this is] mass breeding," wrote a netizen.

Specialist Views and Real-World Effect

Hiking taxes on condoms is largely seen as a symbolic move. An average box of condoms costs 40-60 yuan (roughly six to eight and a half dollars). The contraceptive pill, purchasable without prescription, cost 50-130 yuan per one-month packet.

"Now that China’s birth policy has shifted to encouraging births and no longer promotes contraception, it is reasonable to resume taxing contraceptives," said He Yafu, an independent demographer. "However, this measure is unlikely to have a significant effect on increasing the fertility rate."

Academic Yun Zhou, a sociologist, said that the new tax was unlikely to affect people’s decision-making, but it signified from the government "the ideal conduct for families." Zhou added that if access to contraception did become difficult, "the brunt of the negative effects will be endured by females, especially those from poorer backgrounds."

Tax Modernisation and Revenue

The tax system overhaul includes formalising through legislation levies that were once managed by administrative rules. While revenues are needed by financially pressed regional authorities, the contraceptive levy is not expected to generate a significant amount of money.

An assessment indicates that taxing contraceptives might yield an extra five billion yuan per year – a minuscule amount relative to China’s general public budget revenue of twenty-two trillion yuan. "We do not believe revenue generation is the primary motivation behind applying this tax to birth control," commented a specialist.