The B.C. government’s 2026 budget announced a series of tax increases, capital project delays, and a reduction of 15,000 public sector jobs over three years. Despite this, major deficits are still forecasted for the indefinite future.
“This budget is different from our past budgets, because this moment is different,” said Finance Minister Brenda Bailey in her speech to the legislature on Tuesday.
The speech blamed the province’s economic condition on challenges such as U.S. tariffs and a cooling housing market.
“It’s time to take a pause on some of the things we want to do to focus on the things we need to do.”
A $13.3 billion deficit is forecasted for the 2026/2027 fiscal year, up from a forecasted $9.6 billion for this year. Further deficits of $12.1 billion and $11.4 billion are forecasted for the two years after that, with the province’s total debt forecasted to rise over the next three years from $154 billion to $235 billion.
“There are those … who said we want deep cuts, we want an austerity budget,” said Bailey, defending the debt increase by comparing the province’s net liability as a percentage of GDP to the rest of Canada.
“And there are others who say we want to keep making historic investments in important areas … the approach is to try and balance the two.”
The government announced a diverse range of tax increases that it said would primarily impact higher-income earners, causing an average increase of $76 a year.
The province will increase the basic tax rate on the first bracket paid by all people from five per cent to 5.6 per cent, the first universal tax raise since 2008, while increasing the tax reduction credit by $115 to $690.
It will also increase the provincial portion of property taxes (known as the School Tax) for homes over $3 million in assessed value, and the speculation and vacancy tax from three per cent to four per cent. And it will expand PST to a host of professional services, removing the exemption for clothing alterations, basic cable and landline telephone services.
The province is also reforming the controversial property tax deferment program so that people using it will have to pay two per cent above the prime interest rate, compounded monthly, to use the service.
“Under our government, B.C. is among the lowest-taxed provinces for working and middle-class families,” said Bailey.
“This doesn’t change that.”
