People in China will pay a 13% sales tax on contraceptives starting January 1, as the country implements changes to its tax system in an effort to boost its declining birth rate. The overhaul, announced late last year, eliminates exemptions that had been in place since 1994, a period when China was enforcing its one-child policy. At the same time, childcare services will be exempt from value added tax (VAT), along with marriage-related services and elderly care.
The tax changes are part of a broader initiative by Beijing to address its aging population and sluggish economy by encouraging marriage and childbirth. Official figures indicate that China's population has contracted for three consecutive years, with only 9.54 million births recorded in 2024. This figure represents approximately half the number of births recorded a decade prior, when China began relaxing its restrictions on family size.
The new tax on contraceptives, which includes condoms, birth control pills, and other devices, has raised concerns among citizens. The move is seen by some as counterproductive to the government's stated goal of increasing birth rates. Business reporter Osmond Chia of BBC News noted the potential for unintended consequences, stating, "The tax could disproportionately affect lower-income individuals and families, potentially hindering their access to contraception."
The elimination of VAT on childcare services is intended to alleviate the financial burden on families and encourage them to have more children. The government is also extending parental leave and providing cash handouts as part of its broader strategy. Yan Chen, also of BBC News, reported that these measures are designed to "create a more supportive environment for families and reduce the economic disincentives associated with having children."
China's birth rate has been declining for several years, despite the relaxation of the one-child policy. The high cost of raising children, coupled with increasing economic pressures, has deterred many young couples from having more than one child, or from having children at all. The new tax policies are the latest attempt by the government to reverse this trend and address the demographic challenges facing the country. The impact of these policies on birth rates and the overall economy will be closely monitored in the coming years.
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