Think-tank says levies will cool market A top government think-tank says a capital gains tax should be considered to help cool the surging stock market, highlighting growing efforts in Beijing to prevent an asset bubble appearing in the mainland economy. Mainland markets fell sharply yesterday after the influential State Information Centre said the equity market was highly speculative, and urged the government to consider introducing taxes on share trading. '[The government] should consider the introduction of a dividend tax, a capital gains tax and a comprehensive reform package for stamp duty' to curb speculation, the centre said, adding that the world's fastest-growing key economy had shown signs of overheating. The mainland market soared 44 per cent in the first six months of the year, the strongest gain among the world's leading equity markets, fuelled by runaway economic growth. The centre, which comes under the National Development and Reform Commission, said the government needed to control the overly fast growth in investment, exports and asset prices. 'Not many stocks are worth holding for the long term due to [their] poor track record of dividend payouts,' said the centre in a research report published by the China Securities Journal. 'Investors can only seek to make a profit from the quick sale and purchase of stocks.' The Ministry of Finance in May raised the stamp duty on stock trading from 0.1 per cent to 0.3 per cent, but that has done little to quell a bull run in the market. The Shanghai Composite Index yesterday ended 2.14 per cent lower at 3,816.165 points as investors fretted about further measures to curb share trading. The centre has also urged the government to boost housing supply, saying demand remains strong due partly to negative real interest rates. It forecast property investment growth would jump to 28 per cent this year from 21.8 per cent last year. The centre said the central government should also consider removing the tax on interest income from bank deposits, a move that could encourage more savings and less stock speculation. The think-tank said economic growth this year is expected to reach 10.9 per cent, the highest in 13 years. That forecast is just above the 10.7 per cent last year. The research bureau of the People's Bank of China last week projected that the economy would grow 10.8 per cent this year. The information centre said that growth was likely to slow in the second half of this year, but it did not give detailed figures. The economy grew 11.1 per cent in the first quarter from a year earlier. The central bank on Tuesday said it would moderately tighten monetary policy to curb growth in capital investment and lending and prevent the economy from overheating. In a statement posted on its website, the bank said it would keep prices stable and keep lending growth at a reasonable pace. The economy faces problems including an irrational structure, inefficient growth and imbalances in international payments, it said. The central bank has raised interest rates twice to contain prices and drain excess liquidity pouring into the economy from the country's record trade surplus. The massive trade surplus will further grow to US$275 billion this year from a record US$177.5 billion last year, the think-tank said. The surplus in the first five months was up 84 per cent to US$85.7 billion, heightening tensions with key trading partners.