While, Singapore still has one of the lowest personal income tax rates in Asia Pacific, the latest hike widens the gap with its archrival Hong Kong, which has a flat tax rate of 17 percent for income above 120,000 Hong Kong dollars ($15,500).
Experts had varied opinions on what the government's redistributive efforts would mean for Singapore's competitiveness.
"This is a budget about strengthening the social safety net to help the silver generation and needy. It continues to attempt to create equal opportunities for Singaporeans," said Grahame Wright, partner of the human capital division at Ernst & Young Solutions. "The increase in top marginal personal tax rate is a calculated risk for Singapore, as its competitive position is weakened for a group of highly mobile senior executives."
Overseas talent – from high earning professionals to low wage laborers - remains an integral part of the Singapore's economy, accounting for around 25 percent, or 1.34 million of the country's 5.47 million population as of June 2014.
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Alan Lau, tax partner at KPMG Singapore, meanwhile, is less concerned that higher taxes will deter top talent.
"The country continues to be a strong draw for its clean image, strong security, good livability and good governance," Lau said. "The increase in top-tier personal tax rate is unlikely to trigger any immediate adverse impact on Singapore's ability to attract top individuals to relocate, work and live in Singapore."
'Not against the idea'
Neil Clark, marketing director, Asia Pacific at eFinancialCareers – a financial services careers website – said he doesn't expect the tax increase will hurt recruitment efforts of Singapore firms.
"People at that level tend to take a lot of things into consideration when it comes to where they work. It's not just about money," he said. "In fact, a lot of our clients in Hong Kong have lost out on candidates because they take a role in Singapore because it offers a better quality of life, easier access to international schools, better air quality."
If the tax rate went up to 35 percent, that may be a different story, he said.
Reflecting Clark's sentiment, high earning foreigners that CNBC spoke with said the increase in taxes seems justified and would not drive them out of Singapore.
"The last decade hasn't been easy on the lower income brackets of Singapore society, so I'm not against the idea of a little wealth redistribution, it's not like they're proposing something like the French socialist government's tax on the rich," an expatriate lawyer who in the top income bracket told CNBC.
"You get tons of great services from the government - it's safe, clean, good public transport, good public hospitals and schools so at least the money is going somewhere useful," he said.