CALLS to impose a capital gains tax to curb property speculation met with reservations. ''A capital gains tax would send a strong negative signal to both local and overseas investors,'' warned the Secretary for the Treasury, Donald Tsang Yam-kuen. Experience overseas suggested punitive taxation on certain categories of capital gains was economically counter-productive, he said. ''It is thus natural that the administration has strong reservations about introducing such a tax, although the subject is not closed and we are still studying the possible ramifications of such a tax in Hong Kong,'' Mr Tsang said. The initial assessment was that a capital gains tax would have a significant, negative impact on property development and investment. To provide an effective deterrent, the tax would have to be set at a relatively high level. This would dampen demand among speculators and those who wanted to make a long-term investment. There was also the danger that property developers would respond by cutting back on production. In addition, Mr Tsang said some problems had yet to be sorted out before the tax could be introduced. Also needing clarification was whether losses should be deductible, gains should be averaged and the tax should apply to transactions in stocks and shares in property related businesses. The legal definition of the term ''speculation'' was another problem. He said it was difficult to set out legal definitions which would not unintentionally penalise genuine home-buyers or those for whom property transactions were the mainstay of a regular day-to-day business.