China's Condom Tax: A Risky Gamble for Babies

China is taking a bold, and some might say controversial, step to tackle its rapidly shrinking population. From January 1st, a new 13% sales tax will apply to contraceptives, including condoms and birth control pills, as part of a sweeping overhaul of the country's tax system. This move aims to nudge couples towards having more children, a stark contrast to the previous decades of strict population control. Beijing is grappling with a demographic crisis, facing an ageing workforce and a birth rate that has plummeted for three consecutive years. Official figures reveal a dramatic decline, with just 9.54 million babies born in 2024 – roughly half the number recorded a decade ago, when China first began easing its one-child policy. The government hopes that making contraception less accessible, alongside other incentives like extended parental leave and cash handouts, will reverse this worrying trend. While contraceptives become pricier, the new tax regime offers some relief elsewhere. Childcare services, marriage-related expenses, and elderly care will now be exempt from Value Added Tax (VAT). This package of measures signals a clear shift in national priorities, attempting to create a more family-friendly environment and ease some of the financial burdens associated with raising a family. However, the "condom tax" has been met with a mix of ridicule and serious concern. Many online observers have pointed out the irony, with one social media user joking about buying a "lifetime's worth of condoms" before the price hike. More critically, health experts and citizens alike worry about potential increases in unwanted pregnancies and HIV rates, particularly among financially vulnerable groups. As one resident noted, making a necessity like contraception more expensive could lead some to "take a risk." Critics argue that the cost of a condom pales in comparison to the immense financial strain of raising a child in China. A 2024 report highlighted China as one of the most expensive places globally for child-rearing, driven by high school fees in a fiercely competitive academic landscape. Furthermore, women often struggle to balance career aspirations with the demands of parenting, while a broader economic slowdown and property crisis have left many young people feeling too uncertain about their future to start a family. Experts are divided on the policy's true intent. Demographer Yi Fuxian suggests that attributing a birth rate impact to a condom tax might be "overthinking it." Instead, he believes Beijing could be primarily seeking to boost tax revenue, especially given a struggling housing market and growing national debt. VAT revenue alone accounted for nearly 40% of China's tax collection last year, a significant sum. Henrietta Levin from the Center for Strategic and International Studies views the tax as largely "symbolic," reflecting Beijing's desperation to lift fertility numbers. Yet, she warns that the government's increasingly intrusive approach – with reports of officials questioning women about their menstrual cycles and family plans – risks alienating the very people it hopes to encourage. Such heavy-handed tactics, she argues, could easily backfire, making a deeply personal choice feel like a state mandate. Ultimately, many observers, including women themselves, feel the male-dominated leadership may be missing the deeper social shifts at play. Beyond China, countries like South Korea and Japan also grapple with declining birth rates, often linked to the disproportionate burden of childcare on women, and broader trends like a decline in marriage and dating. One resident even suggested that rising sales of sex toys indicate a societal move towards self-satisfaction, as genuine human connection becomes "more of a burden" in a high-pressure, exhausted society. --- Managing your business finances? TaxAce provides smart online accountancy services for UK businesses with flexible monthly plans. Image and reporting: https://www.bbc.co.uk | Read original article