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 action aligns with the nation attempts to boost its fertility levels while concurrently modernising its tax laws.
The Specifics 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 the early nineties.
This provision was included in a broader VAT law passed in 2024, aimed at updating the country's tax regime. VAT currently accounts for close to forty percent of the government's overall tax income.
A Broader Context of Pronatalist Policies
Following many years under a rigorous single-child rule, China has, over the past ten years, been introducing a range of "carrots" designed to persuade people to have more children.
Such initiatives encompass:
- Increasing the cap on the number of kids a family can have to 3.
- Local governments testing subsidies for fertility procedures and cash subsidies for extra children.
- Some local governments offering additional holiday for recent marriages to promote marriage.
"What has happened to our world? They are truly going to extreme lengths just to make us have children," commented an individual on the Chinese microblogging site.
Public Reaction and Symbolism
The prospect of condoms becoming more expensive has been met with ridicule online. At the same time, the updated legislation also provides a tax deduction covering childcare and "marriage introduction services".
Authorities have also earmarked ninety billion yuan for its initial countrywide child support initiative, providing yearly payments of 3,600 yuan for every toddler aged below three. Plans were also announced to extend national healthcare insurance to cover all childbirth-related expenses.
Limited Impact of Incentives
Yet, these inducements have shown little effect. Last year, the fertility figure stood at 6.77 births per thousand individuals, a slight increase on 2023 but still well under long-term averages. A rising death rate driven by an ageing population means the nation's populace has been contracting for three years running.
A Shift Towards "Sticks"?
Observers now worry that authorities may be turning to more coercive "sticks" to meet the state objective of increasing the number of babies.
Reports have emerged of women in some areas getting calls from local government officers asking about their periods and childbearing plans. For example, residents of a Yunnan county were said to be told to disclose the timing of their most recent menstruation to area administrators.
"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," responded one social media user.
Specialist Views and Real-World Effect
Hiking taxes on condoms is widely considered a gesture. An average box of condoms costs 40-60 yuan (roughly six to eight and a half dollars). The contraceptive pill, available over the counter, cost 50-130 yuan per one-month packet.
"Given the change in national fertility policy to encouraging births and has stopped advocating birth control, taxing these products again is logical," said He Yafu, an autonomous population expert. "However, this measure is unlikely to have a major impact on raising the fertility rate."
Academic Yun Zhou, a sociologist, stated the fresh levy was not probable to alter personal choices, but it communicated the state's view on "the ideal conduct for families." She further commented that if access to contraception did become difficult, "the worst consequences will be endured by females, especially those from poorer backgrounds."
Tax Modernisation and Revenue
The tax system overhaul includes codifying into law taxes that were previously governed by regulations. While revenues are needed by financially pressed regional authorities, the contraceptive levy is not expected to generate a substantial revenue stream.
One estimate suggests that imposing VAT on these products might yield an extra five billion yuan per year – a minuscule amount relative to China’s general public budget revenue of 22tn yuan. "It is not thought that raising money is the primary motivation behind extending VAT to contraceptives," said an analyst.
