China's New Tax Measures to Boost Birth Rates

China has removed a longstanding tax exemption on contraceptives, imposing a 13% VAT in an effort to increase birth rates, which have been declining. This decision is part of broader initiatives including childcare subsidies and education reforms to encourage marriage and family-building.

China has removed a three-decade-old tax exemption on contraceptives, now imposing a 13% value-added tax from January 1. This measure aims to reinvigorate birth rates in the world's second-largest economy, where population numbers have continued to fall for a third straight year in 2024.

The nation's leaders are actively seeking ways to boost birth rates despite previous efforts, such as exempting childcare subsidies from personal income tax and introducing annual childcare allowances. Initiatives also include promoting 'love education' at colleges to create positive perceptions of marriage and family life.

Falling birth rates are partly attributed to the legacy of China's one-child policy, urbanisation, and socio-economic challenges like the high cost of living, job insecurity, and a slowing economy, leading many young adults to delay or avoid starting families altogether.

(With inputs from agencies.)