China Triples Tax on Stock Trades

By KEITH BRADSHER for The New York Times
Published: May 30, 2007

HONG KONG,

Chinese stocks plunged today after China’s finance ministry announced early this morning that it would triple the tax on stock trades, a move aimed at braking what many business executives and economists inside and outside China now see as a stock market bubble.

Just seven days ago, the finance ministry and the State Administration of Taxation took the unusual step of publicly denying that they had any plans to change the tax on stock trading. The finance ministry reversed itself with a statement on its Web site early this morning noting that increase had been ordered by the State Council, the cabinet of the Chinese government.

By raising the tax, the government now runs the risk of being blamed by the Chinese public if it sets off a stock market rout. A composite index of yuan-denominated A shares traded in Shanghai and Shenzhen plunged 6.3 percent at the opening today, partly recovered by midmorning for a loss of 2.7 percent, then slumped to post a loss of 6.3 percent again by midafternoon.

Millions of citizens have invested their savings in a market that has nearly quadrupled since the start of last year. New investors, many of them with no experience in trading stocks, have been opening brokerage accounts at a pace of roughly 300,000 a day for the last two weeks, with a record 455,111 accounts opened on Monday. Leia mais aqui