CHINA scrapped the tax levied on interest income of securities accounts in another attempt to stabilize market sentiment, the Ministry of Finance said yesterday.

The ministry said that since October 9 individual investors have not needed to pay the tax on interest earned from their stock settlement funds. It was the same day when tax payments on interest income from bank deposits were also abolished.

The announcement came amid a package of state incentives to help bolster the stock market, which has tumbled nearly 20 percent this month as global financial market woes and concerns over an economic downturn took center stage.

But Li Daxiao, director of the research department at Yingda Securities, said the latest move would only have a mild positive impact on China's equity market given that the tax was not a huge burden for most investors, a view shared by He Chengying, assistant to the president at Guosen Securities.

"For individuals, the tax on interest income from stock accounts is so small that most people don't even know there is such a levy," He said. "But still, the policy reflects government attempts to stabilize market sentiment and (investor) confidence."