This piece of mine was first published on my blog on 30 November 2017. In light of impending GST hikes in Singapore, it has been republished by Wake Up Singapore on 2 February 2022 at


On 19 November 2017, Prime Minister Lee Hsien Loong announced that the PAP Government is planning to increase taxes. [1] His announcement fuelled wide speculation of an imminent hike in Goods and Services Tax (GST).

GST is a tax on domestic consumption. The tax is paid when money is spent on goods or services, including imports. GST is not applicable for sales and leases of residential properties, importation and local supply of investment precious metals and most financial services.

GST was first introduced in Singapore on 1 April 1994 at 3%. The GST rate was increased to 4% in 2003, to 5% in 2004 and to 7% in 2007. GST currently stands at 7%.

On 29 November 2017, The Business Times reported: “The Goods and Services Tax (GST) is likely to be raised by two percentage points in the coming years as Singapore’s spending needs continue to grow, according to DBS senior economist Irvin Seah.”[2]

It is important to note that GST is considered to be a regressive tax. A regressive tax is one where the poor pay more tax, as a percentage of their income, than the rich. GST is a tax on consumption. Generally, poorer households spend a greater proportion of their income on consumption compared to higher income households. So, when tax is based on consumption, the poor would end up paying more tax, as a percentage of their income, than the rich.

The fact that GST has remained the same since 2007 makes it the easiest target to hit in the hunt for additional revenue.

If taxes must be raised, two types of taxes which impact richer Singaporeans more than poorer Singaporeans come immediately to mind.


Capital Gains Tax (CGT) is a tax levied on the profits a person realizes when he sells his asset for a price that is higher than the original purchase price.

There is no CGT in Singapore. The gains derived from the sale of a property in Singapore are not taxable. (Exception: when a person is deemed to be trading in properties, the gains from the sale of property in Singapore is considered taxable income.) Likewise, no tax is payable on profits derived from the buying and selling of shares or other financial instruments.

Singapore has been a “No CGT” city for the longest time that I think “No CGT” has become a sacred cow — never to be slaughtered!


Estate Duty (ED) is a tax on the total market value of a person’s assets (cash and non-cash) at the date of the person’s death. Beneficiaries will receive their share of the deceased’s estate net of ED.

The British introduced ED into our tax system. The rationale for ED is to prevent accumulation of wealth. The aim is to encourage asset-rich people to distribute their wealth during their lifetime in order to minimise ED. If you die a pauper, there will be no ED; if you leave behind millions to your loved ones upon your death, your estate will attract ED.

While Singapore never had CGT, we had ED all while, until it was abolished in 2008.

In 2008, Minister for Finance Mr Tharman Shanmugaratnam (MOF) informed Parliament that he had decided to remove ED for deaths on and after 15 February 2008.

In announcing his decision to abolish ED, MOF said:

“Proponents of removing estate duty have therefore argued that removing it would encourage wealthy individuals from all over Asia to bring their assets into Singapore, thus supporting the growth of the wealth management industry. Ordinary Singaporeans have also argued that having worked, paid taxes on their income and property, and built up their savings, they want to be able to pass it on to their families. Some are in fact liable for estate duty when their estates receive large life insurance payouts.”

- BUDGET STATEMENT 2008 delivered in Parliament on 15 February 2008 by Mr Tharman Shanmugaratnam, Minister for Finance, Singapore (Para 4.71 to 4.79)[3]

At the end of the day, the abolition of ED was not up for debate in Parliament. Rightly or wrongly, it was the prerogative of the MOF to decide whether to continue, modify or abolish ED. The MOF decided to do away with ED and it was so.

When a person dies and leaves property to beneficiaries, the beneficiaries gain a windfall. The share of the deceased’s estate comes to him as a gift. He did not have to work for the benefit.

In comparison, earned income is taxable. For every dollar earned and worked (for which time was spent and effort made), a certain portion must go to the State (subject to applicable exemptions and allowances). So taxing earned income and taxing gifts have very different impact on a person.

  • · Was the removal of ED applauded by asset-rich Singaporeans?
  • · Is a “No ED” regime more beneficial to the rich?
  • · Have Singaporeans on the whole benefitted from and continue to be better off, without ED?

Interestingly, ED (if we have it) would only tend to affect a minority of Singaporeans i.e. the wealthy and beneficiaries of the wealthy.

CGT (if we have it) would only affect those who have capital (money, assets) in the first place and make money from capital.

Income tax is imposed on people who work and on companies which are profitable.

GST affects all Singaporeans (whether you work or don’t), but impact poorer Singaporeans more.

If the Government needs more money, we should consider whether the rationale for removing ED continues to apply and whether it would be beneficial to the collective interests of Singaporeans to bring ED back — or more pertinently, introduce an updated form of ED — in preference to increasing GST.

By Jeannette Chong-Aruldoss

30 November 2017




Khoo Teck Puat died on 21 February 2004. His estate was liable to estate duty.
Kwa Geok Choo died on 2 October 2010, after the abolition of Estate Duty.




A lawyer practising in Singapore for more than 30 years.

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Jeannette Chong-Aruldoss

Jeannette Chong-Aruldoss

A lawyer practising in Singapore for more than 30 years.

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