Death Tax Buried

Source : TODAY, Weekend, February 16, 2008

Banks hail move that will boost S'pore's position as a premier financial centre

With intensifying calls over the years for estate duty to be abolished, the Government has finally laid the outdated tax to rest, in a move that should boost Singapore's standing as a wealth-management centre.






















Explaining the decision to do away the source of $75 million in average annual revenue for the Government, Finance Minister Tharman Shanmugaratnam noted that the tax on estate was inherited from the British.

"Estate duty is a means to rebalance opportunities with each new generation and prevent wealth from being concentrated in fewer and fewer hands over time," he said. "It was especially relevant at the time when the bulk of wealth comprised land that was passed down through the family."

But these days, wealth is being created in many more ways, and by a wider group of entrepreneurs, he added.

And with wealth being managed on a global basis, financial experts have been stressing that the removal of estate duty in Singapore would encourage wealthy individuals from all over Asia to bring their assets here.

Ordinary Singaporeans have also said they would like to pass their assets on to their families. Some incurred estate duty when their estates received large life insurance payouts upon their deaths, noted Mr Shanmugaratnam.

Exemption from estate duty had applied to the first $9 million of residential properties and the first $600,000 for non-residential assets. While the Government did consider raising the $600,000 limit so estate duty would have less effect on middle and upper-middle-income estates, this would further shrink an already narrow tax base and render the tax less effective.

Thus, removing Estate Duty would not just be a "practical or expedient measure", but one that "on balance will be in our collective interest", he said.

"If we make Singapore an attractive place for wealth to be invested and built up, whether by Singaporeans or foreigners who bring their assets here, it will benefit our whole economy and society, not just the individuals who build up their wealth."

Banks and financial institutions here enthusiastically hailed the death of estate duty.

"We are happy to give estate duty a decent burial and final send-off, said Ernst and Young's partner of tax services, Ms Winnie Liew. The Association of Banks in Singapore said the move was "very favourable for the further development of Singapore as a premier financial centre".

Standard Chartered Singapore's general manager of wealth management, Mr Dennis Khoo, noted that while it might mean a loss in tax revenue, there is an overall nett gain for Singapore if the wealthy choose to retire here.

Singapore's remaining tax on wealth is now on property and this would be retained, said Mr Shanmugaratnam: "You cannot tax-plan it away. It also does not affect our middle and upper-middle-income estates disproportionately compared to wealthier ones."