The introduction in Shanghai this week of a land appreciation tax on all new property sales will not damage buoyant sentiment in the marketplace, according to property agents. At just 0.5 per cent, the new tax was small and would not alter home-buying plans, said Jacky Fung, general manager of Midland Realty's Shanghai branch. 'The rate is even below the 1 per cent levy charged in Beijing,' said Mr Fung, and this modest tax burden signalled to homeseekers that the government did not have any further major measures in mind in the near future, since it did not want to damage confidence in the market. The Shanghai municipal government warned last month that it would start levying the land appreciation tax - charged at a progressive rate from 30 to 60 per cent of the capital gain - on individual property owners who resell their luxury flats within five years from the purchase date on July 15. But a property owner who cannot produce the original flat purchase invoice can choose to pay 0.5 per cent of the resale price as tax if he resells the property within three years from the purchase date. Property sellers are believed to prefer this option as the charge will likely be much lower.