The introduction of GST has been proven to exacerbate economic stress, reduce disposable income, and increase the cost of raising children. Combined, these factors could contribute to declining birth rates, as families become more cautious about the financial responsibilities of having children in a GST-influenced economic landscape.
Malaysia introduced GST in 2015 and saw a rise in the cost of living, which sparked public protests and economic concerns. Even though the birth rate in Malaysia had already been trending downward before the GST, the added financial pressure of GST might have further influenced family planning decisions. Malaysia’s fertility rate continued to drop, dipping below the replacement level in recent years.
Japan increased its consumption tax (similar to GST) in stages, with hikes in 2014 and 2019. Japan already faced one of the world’s lowest birth rates, and the tax hikes placed additional pressure on household spending. Some experts argue that these tax increases worsened the economic outlook for young families, discouraging childbearing in a country already grappling with a shrinking population.
Australia introduced GST in 2000, the overall cost of living rose due to increased prices on goods and services. Although the country’s fertility rate was already below replacement level, economic uncertainties caused by GST-related inflation might have further discouraged young couples from having more children.
After the introduction of GST in 2017, the cost of goods and services increased, which could contribute to financial stress for middle- and lower-income families. While it is difficult to isolate the direct impact of GST on birth rates, the economic stress from rising living costs might have contributed to the ongoing decline in fertility rates. India's fertility rate has been steadily declining for years, reaching below replacement levels, and factors like increased costs of raising children might play a role.
When GST is implemented, people may experience a reduction in disposable income, especially among low- and middle-income families. With less money available for non-essential spending, families may choose to prioritize saving and delay or reduce the number of children they plan to have. Economic instability can create uncertainty about future income, leading to a cautious approach toward major life decisions like having children.
Many countries with GST also apply it to healthcare services, including fertility treatments, prenatal care, and childcare products. When these essential services and products become more expensive, it could discourage couples from pursuing fertility treatments or expanding their families. For example, the cost of maternity care, baby formula, and diapers may increase post-GST, further discouraging larger families.
Tax changes, especially new consumption taxes, often create economic uncertainty as consumers and businesses adjust. This uncertainty can cause people to delay major life decisions, such as having children, until they feel more financially secure. In environments where economic reforms, like the introduction of GST, lead to wage stagnation or inflation, family planning may take a back seat to economic survival.
With the rising cost of living due to GST, more women may feel pressured to remain in or enter the workforce, reducing the likelihood of them having more children. The financial necessity to work and sustain the household under a higher tax burden might lead to decisions against having larger families, or delaying childbearing to focus on career and financial stability.
The introduction of taxes like GST often results in dissatisfaction with government policies. Families might perceive this as a sign that future economic conditions may worsen, further dampening optimism about raising children in a potentially unstable financial environment.
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The introduction of GST has been proven to exacerbate economic stress, reduce disposable income, and increase the cost of raising children. Combined, these factors could contribute to declining birth rates, as families become more cautious about the financial responsibilities of having children in a GST-influenced economic landscape.