HONG KONG'S property industry is to launch an aggressive lobbying campaign against the newly imposed property tax in China. The lobbyists are concerned about the detrimental effect the tax will have on Hong Kong developers and hope to persuade officials in Beijing to ignore projects which are not aimed at speculation. David Ho, vice-president of the Hong Kong Association for the Advancement of Real Estate Construction and Technology, said: ''We've contacted many well established and other property developers in Hong Kong and they are extremely concerned with the situation.'' He added that the new property tax had been introduced on a provisional basis, leaving room for amendment at a later date. Alfred Shum, a partner of Ernst & Young, said: ''All Hong Kong developers we have spoken to have given us full support to arrange a lobbying delegation to Beijing. We'll certainly do something within the coming two weeks.'' On December 13, Beijing announced the imposition of a property gains tax which means developers now pay three types of tax. The two others are profit tax (15 per cent in special economic zones and 33 per cent elsewhere) and business tax (five per cent). The total tax rate will now range from 45.5 per cent to 78.2 per cent on profits. Previously, it was between 18 per cent and 38 per cent. The new imposition will come into effect from January 1 and applies to developers and end-users. It has not given exemption to projects sealed before the application date. The move has shocked many well-established developers in Hong Kong. Almost all hold substantial property projects in China. Mr Shum said: ''A stable tax system in China has been one of attractive points to foreigners. The new property tax will have a negative impact on China's investment environment. ''We have to let Beijing officials understand how badly it will hit China's property market. ''If they don't believe us, see what the result will be in a year's time.'' Mr Ho said many developers were now looking at the profitability of their property projects. He added that the new property tax would have a bigger impact on well-established developers than smaller companies. ''Small companies can easily structure to avoid taxation. Many big developers, however, are listed companies and their tax planning has to follow a set pattern,'' Mr Ho said. He added that some developers planned to change their property projects to other industries, such as hotels or manufacturing. The association and Ernst & Young may launch the lobbying campaign together in order to draw more attention to their claim. Both said the lobbying had to be carried out as soon as possible - within one or two weeks - because rumours suggested that details of the new property tax would be published before January 10. ''It will be better if we can change their minds before the publishing date,'' said Mr Ho, who is also a solicitor of Baker McKenzie. He added that working out the lobbying campaign had not been easy, especially gathering opinions of all developers before Christmas. He said: ''Many points are still unclear and confusing. We have to first find out what's going on and then prepare a new tax approach for our clients.'' Mr Ho added that he would soon be submitting a statement to Beijing on behalf of his clients. The new tax was originally devised to clamp down property speculation. It will, however, have an effect across the board because the tax has no exemption clauses for certain developments. Mr Ho said he would urge Beijing to exempt those projects where lands were granted through auctions and tenders at a market price, where agreements were signed before January 1 and for development not for speculation. Under the new property tax system, projects which gain less than 20 per cent profit will be excluded. However, most property projects are estimated to have a profit margin of more than 30 per cent. Mr Ho said: ''It is pretty risky to have property projects in China. If the profit rate is too low, it will not be worth investing there.''