China to Impose 13% VAT on Condoms and Contraceptives Amid Demographic Crisis

China Imposes New Tax on Contraceptives

Starting January 1, 2026, China will implement a 13% value-added tax (VAT) on condoms and other contraceptive products, ending a 30-year exemption. This move is part of a broader strategy by the Chinese government to address its rapidly declining birth rate and severe demographic challenges. The new tax will apply to items that have been VAT-exempt since 1993.

A Reversal of Decades-Old Policy

The decision marks a significant departure from China's long-standing family planning policies, particularly the strict 'one-child policy' enforced from 1980 to 2015. During that era, contraception was actively promoted and often made readily available, sometimes even at no cost, to control population growth. The exemption of contraceptives from VAT was a cornerstone of this approach. However, with the country now facing a demographic crisis, the government is shifting its focus from limiting births to actively encouraging them.

Addressing China's Demographic Challenges

China's population has been declining for several consecutive years, with only 9.54 million births recorded in 2024, roughly half the 18.8 million births registered a decade ago when the one-child policy was lifted. In 2023, India surpassed China as the world's most populous country as China's death rate exceeded its birth rate. The government has gradually relaxed birth limits, allowing couples to have two children in 2016 and three in 2021, but these measures have not significantly boosted birth rates. The new tax on contraceptives is intended to send a clear signal about the state's updated priorities and reshape social norms towards population growth.

Broader Pro-Natalist Measures and Expert Concerns

The imposition of the condom tax is part of a broader package of pro-natalist policies. Alongside making contraceptives more expensive, the government is introducing incentives such as:

• Tax exemptions for childcare services, eldercare facilities, and marriage-related services.
• Increased maternity leave and proposed paternity leave.
• A nationwide childcare subsidy program, offering 3,600 yuan annually for each child under three.
• Plans to cover all out-of-pocket expenses related to childbirth from 2026.

Despite these efforts, experts remain skeptical about the effectiveness of the condom tax in significantly increasing birth rates. Demographers like He Yafu suggest the measure is largely symbolic and unlikely to overcome the high costs of raising children and long working hours, which are primary deterrents to larger families. Concerns have also been raised about potential public health risks, including an increase in unintended pregnancies and sexually transmitted infections (STIs), particularly affecting economically disadvantaged populations.