I think the budget has agreeable and disagreeable areas. Like the author said, estate taxes have the effect of benefiting the rich. However, it also encourages wealthy international individuals to park their assets here... BUt the upshot is......Is this the voice of the SG people? I wonder... Is this my country? I wonder... Is this a government I've elected? (its a NO for me because my GRC has always been a walk over). When can we have a people's government? When can I have a MP whom I think would best serve my interest.. not what the empire thinks.

Personally, I find the estate tax pretty disagreeable too. The best time to tax someone is when he's dead and can't complain. :-)

But it's also clear to me why the Govt abolished it. They are after the bigger fish. Estate tax only contributes some $70 mil to the coffers which is quite insignificant compared to $30 billion of tax revenues. The truth of the matter also is that it's impossible to get at the mega-rich with estate tax because they can afford damn good accountants who would have done their magic before the fella is actually dead.

Let's hope they are right that abolishing estate tax will eventually yield a net increase of more than $70 mil in tax revenue. :-P

When Khoo Teck Puat died, he paid hundreds of millions in estate duties, but that was an exception rather than the norm. The annual collection (barring those exceptions) is fairly modest, as noted by KTM. The truth about estate taxes is that it actually hits the middle class - families with some wealth, but are not otherwise rich enough (or savvy enough) to do tax planning.

Hire a tax lawyer, set up a trust (better still, an overseas one), transfer the wealth there, and you can easily tax plan away any estate duties and preserve your wealth for generations after your death. Remove the estate duty, let the offshore money come back onshore to create jobs and opportunities for us.

Voice of the People, oh what a burden you bear with your moniker. I don't agree with you, since democracy is not about your vote per se, but the vote of, that's right, 'the people'. And the PAP government is legitimately elected by the majority of Singaporeans, so it is our government, it is, oh what burden, the voice of the people.

KTM and Bart, I totally get it too. I supported the GST increase last year because I see it as part of an overall programme to attract the super-rich to Singapore, to park their capital and their asses here, taxing not their capital gains but their consumption. The luxury property market, integrated resort, yachting facilities are all part of the programme to turn Singapore into a Caribbean or Mediterranean Riviera with trickle-down effects for the rest of Singaporeans.

That said, as the two of you mentioned, taxation doesn't bother the super-rich since they have hired guns to get away with taxation, so I don't see how abolishing the estate tax would attract the super-rich who are already attracted to Singapore for other reasons. Besides, capital gains are not taxed and this is a major incentive for the super-rich to invest capital in the financial market here. And I wonder whether the capturing of capital is necessary or even possible when capital is highly mobile in the global capital market. The estate tax, if anything, has to do with fixed property assets, and why would the super-rich bother with the taxing of their inherited property in Singapore which accounts for a small percentage of their wealth? I see little trickle-down effects on jobs and opportunities from a booming luxury-property market.

I agree that the main beneficiary is the middle class, or to be more specific, mainly upper middle class Singaporeans who own private property. And that is my point, peg the estate tax threshold to the annual ministerial income, why abolish it? I follow John Stuart Mill's liberal political economy on this point, where the inheritance tax is necessary for an equitable distribution of opportunities functional for a working meritocracy that favors talent not inherited wealth.

Dansong says:
Voice of the People, oh what a burden you bear with your moniker. I don't agree with you, since democracy is not about your vote per se, but the vote of, that's right, 'the people'. And the PAP government is legitimately elected by the majority of Singaporeans, so it is our government, it is, oh what burden, the voice of the people.

What vote of the people? There is NO VOTE when there is a walkover? Wake up! The boundaries for the GRC gets changed each time an opposition group gets too close for comfort for the ruling party, to be elected. Examples, i don't believe I need to provide. Others have already.

Voice of the people - who is dansong kidding who? his voice maybe but not many others who have had the opportunity to express in the internet, zero in the mainstream media.

sj, at least you don't carry the burden in your name, but you seem to be like Voice of the People, seeking to represent the disenchanted multitude, oh what burden, always speaking on behalf of others. Am I kidding anyone? I speak for myself, the elected PAP MPs represent their constituents. Not happy with the representation because the opposition parties decided not to stand there? Move to Aljunied or other sure-have-WP wards. Cannot move for one reason or another? Join the WP so that they can build up their organization so that they can field candidates in every constituency. My point is that our system is democratic enough for you to do something to make our democracy more democratic -- many are already trying in one way or another, without the anonymity. I don't see how going on a diatribe in Singapore Angle and a tangent on my post is going to help. Wake up? These days I don't sleep much. Perhaps you are referring to the red pill blue pill thingy? Perhaps you should try taking the red one and join the WP instead of hanging around in this matrix.

The Singapore Government is into this "green business" because there is money to be made and I don't think they ever pretended otherwise. It is not some kind of radical environmentalism they are pursuing nor some vision of environmentalism and social justice. If there is a critique of capitalism culture of waste, it is not the radical critique ala Murray Bookchin but the neo-liberal auditing culture to perhaps make capitalism even more efficient and "self-regulating." I think it is really more a case of green capitalism or ecological modernization that extend (with some restructuring) the old regime and ideology of development. Just like why wal-mart and other big corporations are jumping into the same bandwagon. Didn't someone from your profession argued that we are afterall in some "risk society" and reflexive modernization (including ecological modernization) is a part of it? So where is the hypocrisy?

Jette: you are quite right that the government is into 'green business' and never pretended otherwise. But the government is also into environmental sustainability -- not radical environmentalism or environmental justice, but definitely "some vision of environmentalism". So I would agree with you only party and disagree with you on the other part. My evidence, the Singapore Green Plan 2012, the latest version being 2006, there's lots of idealism and vision in it, and a lot predates Al Gore's performance. Green business is green business, making money out of environmental pollution, disasters, risks and what not -- this does not entail making your own house sustainable. So, for hypothetical example, green business is like Walmart selling energy-saving appliances but doesn't care to audit its own business practices to reduce energy consumption. Green capitalism, on the other hand, is about combining both green business and the sustainability vision of environmentalism. Hypocrisy is when one is claiming green capitalism when one is actually only doing green business.

That said, I am not charging the Singapore government for green hypocrisy yet. I said, "But it smacks of hypocrisy if we are a major player in the green energy industry and at the same time a major CO2 emitter and energy consumer (per capita) because we don't use the technology we sell." The IF is really important, because we are not yet a major player. So my point is that the government should stick to its green capitalism ideals of combining green business with sustainability, and I hope it does and I hope citizens would watch out and help it to do so. One way to help is to evaluate existing policies and, currently, I find the Green Mark policy somewhat lacking and the Feed-In Tariffs dismissal by MTI unconvincing. Although, I must say that after I wrote this, there have been further announcements and discussions on this issue in the press, and I have not gotten to re-evaluating my position yet.

Dear Sir,

It is not correct to say that estate duty is a tax only on fixed assets. estate duty was on (1) movable assets above $600,000 and (2) immovable assets above $9m. As a result, the middle class, who presumably may have more than $600,000 in movable assets (although more likely having less than $9m in fixed assets) would be liable to estate duty tax. The question then is whether, perhaps, the exemption of $600,000 for movable assets should be raised. It has been raised repeatedly in the past before, so why not just raise it again? The thing is, it's not just a question of quantum. It is a question of whether there should be estate duty tax in the first place. Personally, I feel that if you have made money in your lifetime, you probably would have paid lots of income tax. After paying that income tax, what is left should be yours to do with as you deem fit. For example, I should be able to give away my assets to my family. Under the old regime, if I gave my assets to my son during my lifetime, there would be no tax (provided the gift was made more than 5 years before my death). So why should I be taxed just because I give my assets away when I die? Estate duty is wrong because is it a tax on someone simply on the basis that he is rich. If you want to tax someone on the basis that his wealth derived from the largess of the state or the efforts of others and that he should give back what he has received, then there is already income tax.

Dear Sir,

It is not correct to say that estate duty is a tax only on fixed assets. estate duty was on (1) movable assets above $600,000 and (2) immovable assets above $9m. As a result, the middle class, who presumably may have more than $600,000 in movable assets (although more likely having less than $9m in fixed assets) would be liable to estate duty tax. The question then is whether, perhaps, the exemption of $600,000 for movable assets should be raised. It has been raised repeatedly in the past before, so why not just raise it again? The thing is, it's not just a question of quantum. It is a question of whether there should be estate duty tax in the first place. Personally, I feel that if you have made money in your lifetime, you probably would have paid lots of income tax. After paying that income tax, what is left should be yours to do with as you deem fit. For example, I should be able to give away my assets to my family. Under the old regime, if I gave my assets to my son during my lifetime, there would be no tax (provided the gift was made more than 5 years before my death). So why should I be taxed just because I give my assets away when I die? Estate duty is wrong because is it a tax on someone simply on the basis that he is rich. If you want to tax someone on the basis that his wealth derived from the largess of the state or the efforts of others and that he should give back what he has received, then there is already income tax.

Dear Sir,

"I follow John Stuart Mill's liberal political economy on this point, where the inheritance tax is necessary for an equitable distribution of opportunities functional for a working meritocracy that favors talent not inherited wealth. "

I'm not very sure what that means, but it seems to me that the best way to encourage talent is not to tax the end product of talent, but to protect, as far as possible, the absolute ownership of what was earned through talent. Also, it does not seem very equitable to me that a person's estate should be taxed simply because the deceased has assets exceeding a certain value, especially if that person had worked hard during his lifetime to earn those assets; he could very well have paid income tax, created jobs, employed people who paid their own income taxes too. Should that person then be required to pay additional tax on his hard earned assets? His beneficiaries, while not being poor, may also not be very well off. So would it be fair to say to them -"well, sorry, I know your late dad was a hardworking man and he wanted to give you something, but guess what? I'm going to take a portion and give it to the State, as this will encourage you to develop your talents and work hard to contribute to society, instead of just living off your Dad's gift." Doesn't sound very fair to me. To me, it would be fairer and possibly more effective for encouraging talent if we were to say "if you work hard and earn lots of money, and pay your income taxes, and create lots of jobs, what you earn and accumulate in your lifetime is yours to do as you please. The State will protect your property and you can be assured that all of it will be left to your family when you die." The idea then, is not to have a system where a certain type of taxation is used to take from a richer person and give it to a poorer person, but instead have a system where all forms of taxation are applied equally to rich and poor as far as possible, so that the poorer person can become as rich as the richer person and rest assured that once he has reached that target, his assets are not going to be taxed. I mean, what is the point of having a system that says I'm going to take something away from you so that you will develop you talent, and once you develop your talent and earn something out of it, I'm going to tax you on it?

hello,

"Estate duty is wrong because is it a tax on someone simply on the basis that he is rich"

If you want to make this argument then progressive taxation on income is also wrong because it is also "a tax on someone simply on the basis that he is rich".

This is not a matter of right or wrong. It's simply a matter of where you stand on the spectrum of left and right. :-)

Sorry. What I meant is that I find estate duty wrong because it is a tax on someone simply because he dies owning assets above a certain value. So if that person worked hard and was thrifty during his lifetime and accumulated wealth and wanted to give it to his family, he would be taxed. But if he decided to spend away all his money during his lifetime and leave his children nothing, then he wouldn't be taxed. The basis for income tax, progressive or otherwise, is different, as it is not based on ownership of assets, but on income earned. So income tax to me is acceptable because it is okay to say "the more you earn, the more you pay". But to me, it is not okay to say "the more you have, the more you pay".

Hi hello,

My apologies for not replying earlier, I've been working too hard and while thrifty, the estate doesn't seem to be piling up =)

I agree fully with KTM that it is not an issue of right and wrong, at least here as I discuss it as I am taking an explicit position on the left of the political spectrum. But when I mentioned JS Mill's liberal philosophy, it is kind of a tongue-in-cheek ironic way of anchoring my left position in his liberal political philosophy, which argues that it is right to tax inheritance, the equitable distribution of property being a precondition for political liberty. I like this analysis of Mill's position and you can get references to where Mill published his argument if you like from the same article.

Now, to tax inheritance is not to tax wealth, it is not the same thing. To tax wealth, the estate duty would be applied annually to a person's holding. On the other hand, to tax inheritance is not to tax the dead person, because a dead person does not exist, he cannot be taxed. Rather, the taxing of inheritance, to put it in your terms, is to tax the income, albeit a one-off income, of those who inherit the dead person's wealth, who may or may not be his children. In any case, the state is not the beneficiary of the tax, since the state is only the instrument of wealth redistribution, so society is the beneficiary.

It is not clear what ethical system or moral yardstick you are using to judge right and wrong, since you are simply saying 'to me, for me', which is very subjective. You seem to be judging from the point of the individual, which either assumes a strong liberal position that the individual's rights are paramount and a conservative position (read Reagan-ist republicanism) of minimal state taxation. Not all liberals would agree with you and I've mentioned JS Mill for one. But let's talk intuitive using the opposition between individual and society. From the point of view of the almost-dead wealthy individual, it may seem unfair, but from the point of view of society, it is fair since the wealthy individual could become so only because society provides for the raw materials (human labor power etc.). sustenance and consumption that enable him to make his wealth.

In any case, you are assuming that contemporary capitalism, which is based on finance capital (look at the turmoil now all because the banks and insurers messed up), rewards diligence and thrift. This is believed rather than evidential. If anything, to get rich in contemporary capitalism (and I am not talking about the industrial capitalism of 1970s-80s Singapore where my parents could actually stand a chance to garner wealth through diligence and thrift) requires (1) prior capital, (2) connections, which are somewhat dependent on 1 and partly on chance, (3) knowledge, which are somewhat dependent on 1 and 2 and partly on talent. Try starting poor today and seek to get rich in one's lifetime -- only a few middle-class folks manage (all those supposedly "rag-to-riches" stories in contemporary Singapore, which are a handful -- think Breadtalk), the working class doesn't stand a chance.

If I am right on my above get-rich formula, then to spread the chance around, since (1) is the fundamental factor affection the other 2 factors, a progressive inheritance tax would spread the monies around so that everyone would have some (1) to develop their talent, work hard, be thrifty so that they can enjoy their lives, pass down a substantial sum for their children to develop their talent, work hard and so on, and spread a small part of his love around through the inheritance tax.

Dear Sir,
The estate duty tax in Singapore was not on inheritance. It was on the deceased's estate. If it had been on inheritence, then the tax would have been based on how much each beneficiary received. So if an estate was divided up and received by different beneficiaries, the chances of paying less tax would be higher. Also, if a beneficiary was less related to the deceased, in some countries, he would pay more tax than a beneficiary with closer relations to the deceased. These considerations do not apply to the estate duty tax in Singapore. I don't like the idea of estate duty tax because it detracts from the right of individuals to own property absolutely and deal with it accordingly. And I don't like the idea of inheritance tax because I do not believe in equality for the sake of equality; spreading money around simply by taking from those who would otherwise have had more and giving it to the poor, in the long run, that just makes everyone poorer. Sounds kind of Marxist to me.

Dear Sir,

And why not have a tax whenever beneficiaries receive (1) gifts (whether before or after death)(2) at a 100% rate? This would ensure that no one got what he didn't deserve and that everyone would get only what he deserved.

Try starting poor today and seek to get rich in one's lifetime -- only a few middle-class folks manage (all those supposedly "rag-to-riches" stories in contemporary Singapore, which are a handful -- think Breadtalk), the working class doesn't stand a chance.

I don't think that's correct too. I think that in Singapore, there are lots of people who originally started off poor, but are no longer so, because they have more opportunities created in a capitalistic system which generally does not favour relying on handouts obtained from the wealthier. The abolition of estate tax or inheritance tax is consistent with this mentality and system.

Hi hello,

The estate duty tax in Singapore was not on inheritance. It was on the deceased's estate.

The principle is the same; it is a tax on inheritance because the estate would be inherited. And inheritance, from your point of view of the individual may be like income, it is not income, it is simply another category altogether, 'inheritance'.

I don't like the idea of estate duty tax because it detracts from the right of individuals to own property absolutely and deal with it accordingly.

Where did the right of individuals to own property absolutely come from? Natural law? It can't be subjective intuition. It has to be rooted in a particular philosophy of the state. What is your position then?

And I don't like the idea of inheritance tax because I do not believe in equality for the sake of equality; spreading money around simply by taking from those who would otherwise have had more and giving it to the poor, in the long run, that just makes everyone poorer. Sounds kind of Marxist to me.

It would be a huge stretch to call JS Mill a Marxist. =)
And one would be hard-pressed to find someone who believe in equality for the sake of equality, even Marxists.
Also, Marxists do not believe in taking from the rich to give to the poor, that would be Robin Hood banditry. Marxists believe in seizing the means of production so that wealth would be gained by the producers; if the rich wants to get involved in the seizure (revolution), by all means. Friedrich Engels, the co-author of the Communist Manifesto, and Marx's buddy, was a industrial capitalist (i.e. factory owner) himself, and used his funds to finance their revolutionary activities. Marxists would not support estate or inheritance taxation, they would simply seize all estates.

Hi hello,

I don't think that's correct too. I think that in Singapore, there are lots of people who originally started off poor, but are no longer so, because they have more opportunities created in a capitalistic system which generally does not favour relying on handouts obtained from the wealthier. The abolition of estate tax or inheritance tax is consistent with this mentality and system.

The operative word is 'today', as I said, I'm not talking about the boom decades of 70s and 80s. There is a hardening of the opportunity structure of capitalism here, for one, because increasingly more resources are needed to just obtain a favorable educational outcome to get a job to move up the social ladder.

Ah, but how then does one account for the increasingly welfarism of the LHL administration? Why the increasing "handouts obtained from the wealthier" from the government (for example, 2% GST hike to fund workfare)?

i haven't had the chance to read it, but it looks like an interesting article:

http://www.iea.org.uk/files/upld-book133pdf?.pdf

Hi Hello,

IEA is a well-known conservative free-market institute, solidly on the political Right, counting Thatcher as one of its fan and vice versa. I guess you are trying to indicate to me your political position without quite saying it. The closest political party in Singapore that buys its free-market ideology would be SDP. In any case, let me return you the gesture. I have read this article, and it is good. Check out the part where Martin O'Neill argues that the Right should logically support inheritance tax:

New Statesman - Death and Taxes

Dear Sir, left, right centre, these labels are not helpful on the specific issue of whether there should be inheritance tax. I have not come across another article which espouses an alternative view supported by arguments which are intellectually more compelling than the one which I cited. I am no political scientist nor economist, so i recognise that that may not mean very much. For the record, I would rather have the PAP than the SDP; not that I am suggesting that you were suggesting otherwise. I just do not support, specifically, inheritance tax.

Hi hello,

These labels are not simply labels but they point to certain assumptions and values that are the basis of what make arguments intellectually compelling or not. And you don't have to be a political scientist to take a political position. I cannot engage you in a discussion if you say 'I just do not support', 'but to me, it is not okay', 'it does not seem fair to me', because these are very subjective opinions. From what angle are you specifying your views? What yardstick are you using to judge what is fair or not? What makes the IEA intellectually compelling to you and not the New Statesman article? What values do we share that we can use as a basis for this debate?

I support the PAP ideology, though not everything the PAP does and I do not support inheritance tax.

I am also not convinced that the continued imposition of estate tax will result in a more equitable distribution of assets to the poor as compared to abolition. In view of the fact that Singapore has no natural resources, one major source of income for the State would be revenue generated through the financial services sector, in particular, wealth management. Singapore has to play to its strenghts. In Southeast Asia, one major source of revenue would be from the rich in China, India, indonesia, Vietnam. Some of these wealthy people in say, Indonesia, would would have to choose where to park their liquid assets. In today's mobile global economy, a rich Indonesian would look at say, Singapore and Australia and choose where to deposit his funds, for his private banker to manage. All things being equal, if he knows that Australia does not have estate duty, then he will just park his funds there, instead of Singapore. Estate Duty at the rate of 5% and 10$ is actually a very substantial sum, so it is a very relevant consideration for these people. When you are talking about the finance sector, rate of return, rate of capital diminishment and security would be major factors in deciding where to park your money. So it is not true to say that the estate duty tax would not affect their decision as to whether to invest in Singapore. So Singapore has to remain as competitive as possible, compared to other countries (especially if those countries have also abolished estate tax) if it wanted to target the financial services sector. The amount of revenue generated for the State (and therefore for the poor) would more than offset the loss resulting from the abolition of estate duty tax. And when these rich people from Indonesia or whatever country come and invest in Singapore and pay commissions to their Singapore private bankers to invest their funds here, all this will be voluntary.

"In any case, you are assuming that contemporary capitalism, which is based on finance capital (look at the turmoil now all because the banks and insurers messed up), rewards diligence and thrift. This is believed rather than evidential. If anything, to get rich in contemporary capitalism (and I am not talking about the industrial capitalism of 1970s-80s Singapore where my parents could actually stand a chance to garner wealth through diligence and thrift) requires (1) prior capital, (2) connections, which are somewhat dependent on 1 and partly on chance, (3) knowledge, which are somewhat dependent on 1 and 2 and partly on talent. Try starting poor today and seek to get rich in one's lifetime -- only a few middle-class folks manage (all those supposedly "rag-to-riches" stories in contemporary Singapore, which are a handful -- think Breadtalk), the working class doesn't stand a chance.

If I am right on my above get-rich formula, then to spread the chance around, since (1) is the fundamental factor affection the other 2 factors, a progressive inheritance tax would spread the monies around so that everyone would have some (1) to develop their talent, work hard, be thrifty so that they can enjoy their lives, pass down a substantial sum for their children to develop their talent, work hard and so on, and spread a small part of his love around through the inheritance tax."

The problem is that this does not take into account sufficiently the fact that Singapore has to compete with other countries. It is not merely a question of saying how capital within Singapore can be distributed more fairly. It is more a question of how Singapore can compete with other countries, and one way is to encourage more capital to come into Singapore from other countries, and be used effectively (e.g. in the Banking sector) with the result that more revenue can be generated for the State (and therefore poor people).

"And I wonder whether the capturing of capital is necessary or even possible when capital is highly mobile in the global capital market."

Are you crazy?

Hi hello,

What PAP ideology, if you don't mind specifying? Yes, it is rather obvious you do not support inheritance tax, the question is why... unless it is simply a religious creed for you.

As per KTM's and Bart's comments and my response to them, I agree with them that for the super-rich, estate tax is pretty irrelevant because they know how to dodge them through various legal means. So the competition point is moot.

Am I crazy, perhaps, plausibly and probably. But you would need to specify what exactly you mean by crazy (just as you need to specify why you do not support inheritance tax). Hey, are you reading my post very slowly or are you re-reading it and getting more worked up by the fact that I hold a different view from you and actually made an argument for it?