I note with interest that Estate Tax may now be reintroduced in Singapore.
Most countries in the world have the concept of Inheritance Tax or Estate Duty and Estate Tax as a concept is not controversial. That said, it is worth a deeper look in the Singaporean context because it was removed without much debate or fanfare in 2008.
This, in turn, begs the questions of why it was removed in the first place and why it may be reintroduced.
A summary of the reasons that were cited for its removal in 2008:
- inheritance tax was a potential barrier to foreign investment;
- the bulk of wealth was no longer land but income generated by other means which makes Inheritance Tax less relevant; and
- it did not serve the interests of ordinary Singaporeans who have worked hard and already paid other taxes.
As a result of these reasons (some of which are cited above), Estate Duty was abolished in Singapore. It is important to note that this was despite the fact that Estate Tax raised the substantial sum of SGD75million per year on average for the state coffers.
Looking at the amount generated and the reasons given for its abolishment, should it have been abolished in the first place?
Has its abolishment brought in more foreign investment which benefitted Singaporeans as a whole? What are the statistics?
Given that Estate Duty has been used by other governments as a means to ensure that wealth is not concentrated in the hands of just a very few, has its abolishment in Singapore led to a greater widening between the rich and the poor in Singapore?
Now that there is talk that Estate Tax may be brought back, it begs the question of whether the landscape and reasons that were cited in 2008 have changed such as to justify its reintroduction.
If so, how?
If the landscape is still vastly similar, was its original abolition a mistake?
These are all the questions that will need to be adequately addressed by Parliament.
If not, it may lead to suspicion that the abolition of Inheritance Tax was used as a means to prevent the public from ascertaining the asset details of the rich and powerful.
Editor’s note: It is interesting to note that the Estate Tax was removed without any form of debate in Parliament. The tax removal was announced by Finance Minister Tharman Shanmugaratnam and simply had the bill passed without any time made available for debate. Refer to the Hansard for the record of the second reading.