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Will China's condom tax help improve birth rates? Here's what experts say
Will China's 13% tax on condoms and contraceptives help improve birth rates? Here's what experts say
In its latest attempt to improve the rate of 1.0 children per woman, China has imposed taxes on condoms, birth control pills and other contraceptives as the once the world's most populous country struggles with anaemic fertility rates.
As of January 1, according to The Conversation report, these items were subject to a 13 per cent value-added tax. On the other hand, services such as child care and matchmaking remain duty-free.
This comes a year after China allocated 90 billion yuan ($12.7 billion) for a national child care programme, giving families a one-off payment of around 3,600 yuan (over $500) for every child aged three or under.
In the report by Dudley L Poston Jr, an award-winning sociology professor at Texas A&M University, said that he does not expect these new moves to have much, if any, effect on reversing the fertility rate decline to one of the world's lowest and far below the 2.1 “replacement rate” needed to maintain a stable population.
Dudley has studied China's demography for almost 40 years.
He said that in many ways, the 13 per cent tax on contraceptives is symbolic. “The new tax is not at all a major expense, adding just a few dollars a month.”
For the math: A packet of condoms now costs about 50 yuan (about $7), and a month's supply of birth control pills averages around 130 yuan ($19). The average cost of raising a child in China is estimated at around 538,000 yuan (over $77,000) to age 18. The cost in urban areas is much higher.
Talking to the BBC, a 36-year-old father was not concerned over the condom price hike. “A box of condoms might cost an extra five yuan, maybe 10, at most 20. Over a year, that's just a few hundred yuan, completely affordable.”
Unfavourable headwinds
The Conversation report noted that the plight of China is partly of its own doing — for a couple of decades, it pushed for a one-child policy to get fertility rates down, and it worked, going from over 7.0 in the early 1960s to 1.5 in 2015.In 2015, the Chinese government abandoned the one-child policy, permitting couples to have two children. In May 2021, the two-child policy was abandoned in favour of a three-child policy.
The government had hoped that this would help create a baby boom, resulting in a sizable increase in the national fertility rate. However, the fertility rate continued to decline to 1.2 in 2021 and 1.0 in 2024.
China's policies over the years
The report noted that China's historic programmes to push down fertility rates were successful because they were aided by wider societal changes — the policies were in force while China was modernising and moving toward becoming an industrial and urbanised society.However, today's policies, aimed at increasing the birth rate, are tangled in unfavourable societal headwinds — modernisation has led to better educational and work opportunities for women, a factor pushing many to put off having children.
In fact, the expert said that most of China's fertility reduction, especially since the 1990s, has been voluntary, more a result of modernisation than fertility-control policies.
Chinese couples are having fewer children due to higher living costs and educational expenses involved in having more than one child, he noted.
Above all, he said, China is one of the world's most expensive countries in which to raise a child, especially compared to an average income. School fees at all levels are higher than in many other countries.
What is the ‘low-fertility' trap
The “low-fertility trap” advanced by demographers in the 2000s holds that once a country's fertility rate drops below 1.5 or 1.4 – far higher than China's now stands – it is very difficult to increase it by 0.3 or more.The argument goes that fertility declines to these low levels are largely the result of changes in living standards and increasing opportunities for women.
Accordingly, the expert said that it is most unlikely that China's three-child policy will have any influence at all on raising the fertility rate. “And all my years of studying China's demographic trends lead me to believe that making contraceptives marginally more expensive will also have very little effect,” he said.
Source: LiveMint
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