THE scrapping of the estate or death duty comes as no surprise. It is yet one more flourish in a series of moves designed to boost Singapore's attractiveness as a wealth management centre - and it is long overdue. Financial advisers and Singaporeans alike will heave a collective sigh of relief.

For wealth management, the scorecard looks good: No capital gains tax. No tax on interest and investment income, and on foreign sourced income. And now no estate duty.

In the past few years, individuals and lawyers have written columns on why estate duty should be abolished. One of the most convincing was by lawyer Goh Kok Yeow, published in The Business Times in 2002. Mr Goh, who advises on estate matters, called estate duty an 'anachronism and unfair form of taxation', from which the amount of collection was tiny.

Based on the inland Revenue Authority of Singapore's annual report for FY2006/07, the number of cases assessed for estate duty has remained fairly steady at more than 1,300.

Collections, as Finance Minister Tharman Shanmugaratnam said in his Budget speech, averaged $70 million through the years. This would be less than half a per cent of the total tax collection of $22.8 billion in 2006/07.

The move should be a plus for the wealth management sector, even though foreigners have already enjoyed favourable tax treatment on their wealth for a few years. Certainly, it results in an even more simplified tax planning process - always a boon for those mulling a move to Singapore for work or as a primary residence.

Equitable wealth redistribution

But it is the issue of the equitable redistribution of wealth that is intriguing. Proponents of estate duty argue that it is a means to effect this redistribution. Inherited wealth, after all, was not earned. Mr Tharman alluded to this in his speech: 'Estate duty,' he said, 'is a means to rebalance opportunities with each new generation and prevent wealth from being concentrated in fewer and fewer hands over time.'

Estate duty, he added, was relevant at a time when the bulk of wealth comprised land.

Today, financial assets are mobile and can easily be moved to the most tax-friendly locations. Singapore definitely qualifies as one.

But what of the redistribution of wealth? Mr Tharman encouraged individuals to give to society. Interestingly, the wealthiest tycoons in the US - Warren Buffett, in particular, Bill Gates and George Soros among other business luminaries - are lobbying the US government not to repeal the estate tax.

In 2001, 120 wealthy Americans published a petition in The New York Times arguing that a repeal would 'enrich the heirs of America's millionaires and billionaires while hurting families who struggle to make ends meet'. The billions of dollars of lost revenue will result in higher taxes on those less able to pay or in cutting benefits like Social Security and Medicare. Most of all, the petition said the repeal would hurt charities. 'The estate tax exerts a powerful and positive effect on charitable giving. Repeal would have a devastating effect on public charities.'

In the US, under a 2001 law, estate tax is to be gradually reduced until 2010, when it is suspended for one year. Then in 2011, the tax returns in full force.

In Singapore, advisers believe the relatively modest rates of estate duty are unlikely to have played a big role in incentivising the wealthy to structure their assets for philanthropic giving. If that is so, charitable giving and philanthropy should flourish alongside the upward trajectory of wealth creation. That will be a win-win scenario for all.