China should revamp its tax regime for the stock market to foster long-term investment and curb speculation, with the ultimate aim of protecting the interests of minority investors, the country's top political advisory body has been told.

The heated debate over proposed tax adjustments came at a time of mounting stock-market volatility and calls from economists and observers for measures to be taken to restore investor confidence.

China should overhaul its stock-market tax policies with a long-term prospective, the Central Committee of the China National Democratic Construction Association said in a proposal over the weekend to the ongoing Chinese People's Political Consultative Conference (CPPCC). The proposal includes:

Reforming the levy of stamp duty on stock transactions to encourage long-term investment;

Coordinating the country's personal and corporate tax systems with the upcoming tax arrangement for the capital markets;

Imposing a capital-gains tax for stock transactions when the time is right, with a low rate for long-term investors and higher rates for speculators;

Adopting international experience to avoid the repeated need to update regulations.

The plan, marked as the No. 1 proposal for the meeting, suggested that investors should be taxed based on how long they keep their equity holdings as this would stabilize market performance.