LEGISLATORS voted down a motion urging the Government to consider a capital gains tax in an effort to curb property speculation and cool the market. The motion, sponsored by United Democrat legislator Dr Huang Chen-ya, was rejected by a vote of 31 to 21. The Government had planned to abstain, but after the debate, the three ex-officio members voted against it. At the end of the two-hour debate, Secretary for the Treasury Donald Tsang Yam-kuen said a capital gains tax would have to be punitive to provide an effective additional deterrent against speculation. However, a tax which kept speculators at bay probably would dampen demand among those who wanted to invest long-term. Mr Tsang said the tax inevitably would reduce the availability of flats for end-users because property developers would respond by cutting supply. ''There is a risk that the proposed tax might hurt the very people we wish to help,'' he said. ''We are particularly mindful that we should not adopt a measure which would likely land us with a bigger problem than we originally had.'' A punitive tax would invite widespread attempts to avoid or evade tax and would send a strong negative signal to local and overseas investors, he said. ''The prospect of having the tax as a band-aid solution to address a temporary problem would seriously undermine two much-vaunted principles of our taxation system - its stability and its predictability. ''Investors would think twice about committing capital to Hong Kong once we got a reputation for introducing stop-gap fiscal measures to tackle social problems, and abolishing them when the need for them went away or political whims turned against them,'' he said. Dr Huang said property prices could not be controlled simply by increasing the land supply, because Hong Kong did not have unlimited land and it took time to build flats. ''You cannot only see the laugh of speculators and ignore the cry of the public,'' he told legislators who did not support the motion. Legislators who voted against included those from the conservative Liberal Party and some independents. Independent Vincent Cheng Hoi-chuen said increasing land supply would curb prices more effectively that a tax which reduced demand. Another independent, Eric Li Ka-cheung, said a capital gains tax should not be used to tackle social problems. However, United Democrat James To Kun-sun said the proposal aimed only to increase the cost of speculation by levying a tax on those selling flats shortly after purchase. The Government had use taxation to achieve aims other than pumping money into the treasury. An example was the high levy on tobacco in an effort to improve public health. The Liberal Party's Moses Cheng Mo-chi said he could not see how the tax would curb property prices in the short term. United Democrat legislator Albert Chan Wai-yip said simply letting it be known that such a tax was being considered would put off speculators.