Consumers will pay a 13% value-added tax on contraceptive drugs and products, including condoms, beginning Jan. 1, as part of China’s newly revised Value-Added Tax Law. Those products have been exempted from tax since 1993 as part of China’s one-child policy, which heavily penalized families for having more than one child from 1980 to 2015. As the country’s birth rate has fallen in recent years, the government has turned to seeking to boost birth rates with a range of incentives and subsidies.
Officially, the latest move has been framed as a “technical adjustment within a broader tax-system reform,” says Yuan Mei, assistant professor in the School of Economics at Singapore Management University. The focus has been about “administrative consistency rather than demographic goals.”
As China has shifted from fearing that rapid population growth in the 1970s would strain resources and hamper economic development to wanting to reverse falling birth rates, some experts say it is reasonable that the government’s policies reflect that change.
