Why is China Making Condoms Expensive? 13% VAT Imposed On Contraceptives

The price of condoms is likely to increase in China after the government imposed a value-added tax (VAT) on contraceptive products as part of a policy to reverse the country's declining birth rates. Under the new plan, citizens will have to pay a 13 per cent premium on contraceptive devices and drugs for the first time since 1993.

These products had been exempt from VAT for the past three decades as China enforced its strict one-child policy and actively promoted birth control.

"Removing the VAT exemption is largely symbolic and unlikely to have much impact on the bigger picture," He Yafu, a demographer with YuWa Population Research Institute in Beijing, was quoted as saying by Bloomberg.

He, however, added that the latest move was an attempt to shape a social environment which encourages childbirth and reduces abortion.

The removal of VAT comes at a time when HIV cases are increasing in China. As per the Chinese Centre for Disease Control and Prevention, HIV/AIDS cases increased dramatically from 0.37 per 100,000 people to 8.41 per 100,000 between 2002 and 2021.

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China's Birth Rate Crisis

China ended its one-child policy in 2016, later allowing up to three children per family in 2021. Despite this, the country has recorded three consecutive years of population decline. United Nations demography models predict China could fall from 1.4 billion today to 800 million by 2100. There were just 9.54 million births in China last year, half the number reported in 2016 when the policy was changed.

While the policy kept a cap on the number of children a couple could have, the total cost of raising a child has also put off young couples in China from conceiving. As per reports, raising a child to age 18 in China costs an average of 538,000 yuan (Rs 65.7 lakh). In cities like Shanghai and Beijing, the figure can exceed 1 million yuan.

In July, Beijing's state media announced that the government would be offering subsidies to parents to the tune of $500 per child under the age of three per year.