In a controversial move to address its deepening demographic crisis, China is set to remove a long-standing tax exemption on contraceptives, including condoms. From 1 January, these items will be subject to a 13% Value-Added Tax (VAT) for the first time since the nationwide tax was introduced in 1993.
A Symbolic Shift in Population Policy
The change, buried within a broader 2024 law to modernise China's tax system, signals a stark reversal from decades of strict family planning. After more than 30 years of a one-child policy, the government has spent the past decade trying to incentivise larger families. Measures have included raising the child limit to three, offering cash subsidies, and expanding paid parental leave. In 2024, the state allocated 90 billion yuan ($12.7bn) for a nationwide childcare subsidy programme.
However, these 'carrots' have yielded minimal results. The birth rate in 2024 was 6.77 per 1,000 people, a slight uptick from 2023 but still far below replacement level. With a rising death rate and an ageing population, China's total population has been shrinking for at least three consecutive years.
Public Ridicule and Concerns Over 'Sticks'
The decision to tax condoms has been met with widespread derision on Chinese social media. One Weibo user sarcastically commented, "What is wrong with modern society? They are truly going to extreme lengths just to make us have children." The tax increase itself is largely symbolic; a typical packet of condoms costing 40-60 yuan ($5.70-$8.50) will see a modest price hike.
More alarmingly, reports suggest local authorities may be adopting more intrusive 'stick' approaches. Women in some regions, including a county in Yunnan province, have reported being asked to disclose their menstrual cycles and childbearing plans to local officials. One social media user warned this could lead to state monitoring of sexual activity, calling it "mass breeding."
Expert Analysis: A Sign, Not a Solution
Demographers and analysts agree the tax is unlikely to meaningfully alter fertility decisions. He Yafu, an independent demographer based in Guangdong, stated that while taxing contraceptives is logically consistent with the new pro-birth policy, "this measure is unlikely to have a significant effect on increasing the fertility rate."
Yun Zhou, an assistant professor of sociology at the University of Michigan, noted the move primarily signifies "what desirable family behaviour should be" in the government's eyes. She cautioned that if access to contraception becomes difficult, "the brunt of the negative effects will be borne by women, particularly by disadvantaged women."
Financially, the tax is insignificant for state coffers. Lee Ding, a manager at professional services firm Dezan Shira & Associates, estimates it will generate only about 5 billion yuan annually—a minuscule sum compared to China's total public budget revenue of 22 trillion yuan. The primary motivation is clearly policy-driven, not fiscal.
As China codifies its tax laws, this measure stands as a potent symbol of the government's growing desperation to engineer a baby boom, despite the complex social and economic realities discouraging young couples from starting families.
