Based on coverage from CBC, CBC, and Bloomberg.
B.C.’s NDP government is rolling out its biggest across-the-board income tax hike since 2008, expanding PST into more services, and cutting 15,000 public sector jobs over three years, all while warning the province’s debt and deficits will keep growing.
Finance Minister Brenda Bailey pitched the 2026 budget as a “measured” response to a tougher economy, arguing the province is trying to avoid deep cuts to public services even as revenue growth slows.
B.C. 2026 budget targets debt and deficits
The budget forecasts a $13.3 billion deficit for the 2026-27 fiscal year, compared with a projected $9.6 billion deficit in the current year. Deficits of $12.1 billion and $11.4 billion are also forecast for the following two years.
On debt, one account says total provincial debt is expected to rise from $154 billion now to $183 billion next year. Another projects a longer climb over three years to about $235 billion (roughly $234.6 billion).
Bailey blamed the fiscal squeeze on factors including U.S. tariffs, investment uncertainty, volatile commodity markets, a cooling housing market, and rising costs. The province also estimates economic growth of 1.3% this year, down from 1.5% in 2025, and flagged trade risks tied to U.S. policy and a coming review of the USMCA.
Income tax changes hit most earners
B.C. is raising the basic tax rate on the lowest bracket (paid by everyone) from about 5.0% to 5.6%. The government estimates the average British Columbian will pay about $76 more on 2026 income taxes.
To soften the hit for lower earners, the maximum tax reduction credit is increasing by $115 to $690. The province says the bottom 40% of earners will see their personal income tax reduced.
Bailey said the government chose not to load the entire increase onto higher-income earners, arguing that would make the system “askew.” She also said people earning under $140,000 will still face one of the lower tax rates in Canada.
Property taxes rise on $3M-plus homes
The provincial portion of property taxes, known as the School Tax, is going up for higher-value homes next year:
- Homes assessed between $3 million and $4 million: tax rate rises from 0.2% to 0.3% - Homes assessed at $4 million or more: tax rate rises from 0.4% to 0.6%
The Speculation and Vacancy Tax is also increasing for the 2027 tax year. Property owners who are foreign or don’t pay taxes in B.C. will pay 4%, up from 3%.
Separately, the province is tightening its Property Tax Deferment Program. New loans will move from simple interest to prime plus 2%, compounded monthly. Bailey said the idea is to discourage people from using deferment as a “cheap source of capital,” and to bring terms closer to commercial lending.
PST expands to professional services
B.C. is expanding PST to a wider range of services, including accounting, bookkeeping, engineering and geoscience, security and private investigation, and commercial real estate.
PST is also being added to services that were previously exempt, including cable TV, landline phones, and clothing and shoe alterations. For households and small businesses, the practical effect is that more routine monthly bills and professional invoices could start carrying PST.
Job cuts and investment shifts draw mixed reactions
The budget includes a reduction of 15,000 public sector jobs over three years, alongside delays to some capital projects. One report characterizes this as affecting about 3.4% of B.C.’s nearly 600,000-strong public sector by 2029.
Reaction split along familiar lines. Carson Binda of the Canadian Taxpayers Federation called the tax increases “bad news for taxpayers,” arguing families are already struggling with affordability. Marc Lee, a senior economist with the Canadian Centre for Policy Alternatives, took the opposite view, saying the government should have raised taxes more on high earners.
Bailey’s bottom line: the province is trying to thread the needle between austerity and continued spending, with health alone accounting for about a third of the budget, but British Columbians should expect higher taxes and a leaner public sector even as deficits continue for years.
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