In order to combat the declining birth rate, which threatens economic growth, Beijing is implementing this tax measure. The new tax will come into effect in January.
As Bloomberg points out, according to the latest amendments to the value-added tax (VAT) law, a 13% levy will be imposed on goods that have not been subject to VAT since 1993, when China had a strict population control policy based on the principle of "one child per family."
The amendments to the law also exempt services related to child care, including nurseries and kindergartens, as well as facilities for the elderly and support services for the disabled, from the tax.
Unfortunately, China's population has been declining for the third consecutive year. In 2024, the number of newborns was only 9.54 million, which is half of the 18.8 million registered nearly ten years ago, when the "one-child" policy was abolished. This policy was in effect since 1979 and aimed to slow population growth and reduce the burden on the country's resources.
In response to this alarming situation, Beijing has initiated various programs to support birth rates, including cash allowances, improving child care services, and extending parental leave. Recommendations have also been published to reduce the number of non-medically necessary abortions.
In 2022, China's population decreased for the first time in 60 years.
As of 2024, India has taken the first place in the world in terms of population, with an estimated 1.442 billion people, while China remains in second place with 1.425 billion residents.
