GST Should be Waived for Renovation

If there’s one wish we have this election season, on behalf of all homeowners and IDs, it’s to remove GST from residential renovation.

Let us explain why.

The 3rd point is especially close to our heart.

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1) The government probably doesn’t even need the money (we think)

When we talk about GST, we’re not talking about paying $4.50 for a $50 meal. We’re talking about a $50,000 renovation bill — and then getting slapped with $4,500 of GST on top of that.

Mentally, it hits differently, due to the amount.

In fact, it might be one of the hardest-hitting, one-off GST amount paid throughout one’s lifetime.

We are not here to venture into politics or whatnot. We are just saying that the tradeoff between the materiality of the revenue collected, and the financial/mental burden placed on homeowners warrants a 2nd look.

2) Businesses find it harder to claim back for GST expenses

Now to be fair, the government doesn’t just pocket the full GST amount charged to homeowners. Businesses can actually claim back GST on their own business expenses (input tax).

Here’s how it usually works:

• I sell something for $100 → consumers pay $9 GST.

• It costs me $80 to produce → business pays $7.20 GST.

• This $7.20 in GST expense is claimable by businesses.

• So technically, the government "earns" $1.80 ($9 - $7.20), not the entire $9 that many people think

But here's where it gets messy for renovation:

• For businesses to claim GST back, their suppliers must be GST-registered.

• In renovation, about 75% of the cost goes to labour — not materials.

• Many of these labour subcontractors (especially Malaysian workers) are not GST-registered.

• Meaning, businesses can’t claim back the input tax properly, and instead of the government only "earning" 20% of the GST collected in reno projects, they’re now probably earning closer to 50-60% (hypothetically)

• This “increases” the cost for businesses

3) GST causes misconceptions and sales talk from IDs to homeowners

This is the main reason why we wrote this article.

GST materially impacts renovation costs, and creates a lot of misrepresentations:

• Some IDs will say: "Oh, we are GST-registered, means we are more reliable." ❌ That’s fake news, don’t fall for it.

• A GST-registered ID might appear more expensive compared to non-GST, when they are earning less.

  • For eg, GST-registered ID can charge $50k for a $40k project cost . The ID earns 20% in profit margin, while the homeowner pays $54.5k ($4.5k for GST)

  • A non-GST ID can charge $52k for the same $40k cost. The homeowner pays less, but the ID is actually earning more now, at 23% (vs 20%) in profit margin

  • Due to complexity of quotations, homeowners might find the non-GST “cheaper”, when they are getting the same items

This is a real and major issue for both homeowners and hardworking, honest, reasonable IDs that are being penalised due to the GST when they might be earning lesser.

If this reno gst revenue to the government (i) is not material, (ii) removing it can even the playing field and (iii) minimise misconceptions, we find strong value in waiving this.

If the government is afraid that companies anyhow act thereafter, there is the HDB license which can be used for renovation firms to toe the line.

This is also why we insist our baseline requirements for all Deconstruct’s IDs and contractors is to be HDB-licensed.

At the end of the day, buying a home and renovating it is one of the biggest expenses for most Singaporeans. So we sincerely hope this removal of GST for residential renovation can be considered.

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