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SHANGHAI - China insisted Thursday it has no plan to impose a capital gains tax on stocks, the latest attempt to calm nervous investors after a surprise hike in duties last week sparked a massive sell-off.
"There is no plan at all as to impose capital gains tax (on stocks)," a front page article in the official Shanghai Securities News quoted an authoritative source as saying.
"It is completely baseless and to suggest that a capital gains tax could be levied at any time, just like the adjustment of the stamp duty, means to have no understanding of the law."
Even if a capital gains tax was to be imposed, it would be subject to a long and arduous legislative process, taking years before it could win approval by the country's lawmakers, the source said in the report.
China's central bank vice governor Wu Xiaoling weighed in with similar comments on the issue at an industry conference in Tianjin, berating the handling of last week's announcement of the tripling of stamp duty.
The news of a hike in stamp duty to 0.3 percent hit sentiment badly on May 30, when the main Shanghai benchmark index lost some 6.5 percent, with investors outraged after an official said that there would be no tax increase.
"China's government has never gone back on its word. This is a violation of discipline of some bureaucrats and definitely does not represent the government," Wu was quoted as saying by the Oriental Morning Post.
Observers said such remarks were clearly aimed at easing recent investor anxieties that regulators might take even more action to cool a market that last year climbed 130 percent and continued to boom this year.
Trade has been very volatile since last Wednesday's stamp duty announcement, prompting a series of declines that included a sell-off on Monday of 8.26 percent, the biggest one-day fall in over three months.
Angry online comments from the investing public have called into question the government's credibility after the stamp duty was increased despite the official's denial.
Thursday's reports helped buoy battered market confidence.
At 11:29 am (0334 GMT), the benchmark Shanghai Composite Index, which covers both A- and B-shares listed on the Shanghai Stock Exchange, was up 56.22
points or 1.49 percent at 3,832.54 points. - AFP/ir
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