B.C.’s finance minister delivered a budget Tuesday that includes billions in new taxes and cuts to the public sector, even as the deficit and provincial debt climb to new highs.
Brenda Bailey said the measures were necessary to reduce the deficit over time and safeguard core services, but advocates, economists and organizations panned the new taxes in particular for being placed on the backs of businesses and working class British Columbians.
The province is projecting a $9.6 billion deficit for the 2025-26 fiscal year, well down from the $10.9 billion it projected at budget time last year, and the $11.5 billion that was projected at the time of the first quarterly update.
But that seems to have little bearing on the coming year, in which the province’s deficit is expected to soar to $13.3 billion. Spending is to increase by $4 billion even as revenue only increases by a little over $500 million.
While the deficit is expected to go down in the second and third years of the plan, to $12.1 billion in 2027-28 and $11.4 billion in 2028-29, that still leaves the province with some of the highest deficits in its history.
In the weeks leading up to the budget, Bailey had said she was likely to be the least-popular person in B.C. when her plan for the next three years was released. But she told journalists on Tuesday that she had to balance between those who wanted big cuts and others who wanted greatly increased spending.
She said she ended up doing neither and that, contrary to some commentary, Tuesday’s budget isn’t one of austerity.
“My hope would be that British Columbians would see that we’re taking protective action. This isn’t about rolling out new shiny programs, now is not the time,” said Bailey.
“What we are doing is protecting the gains that we’ve made over the last year. We’re protecting the gains that we’ve made in child care. We’re protecting the gains that we’ve made investing in new hospitals and in education. We’re protecting those gains, but we’re not adding new things on that we would like to.”
By far the biggest new items in the budget are the tax increases meant to raise $4.2 billion in new revenue over the course of the three-year plan. This includes an increase of the base tax rate from 5.06 per cent to 5.6 per cent, which means that roughly 60 per cent of British Columbians will be paying $76 on average more in income tax in 2026. Those making over $140,000 annually will pay a maximum of $201 more this year.
The speculation and vacancy tax is also being increased from three per cent to four per cent and the provincial sales tax is being extended to professional services.
In terms of added spending, which will come out to $9 billion over the next three years, much of that will be concentrated in health care and education, including $2.3 billion for primary care and $330 million for K-12 education.
There is also $139 million more for public safety, including $73 million for court operations as well as recruiting sheriffs, Crown counsel and improving legal aid.
There is $330 million for child-care fee reductions. But there is no additional money for the province’s $10-a-day child care program and the province is pausing all new applications to the current model, which advocate Sharon Gregson said isn’t surprising.
“The budget could have been worse. We could have cut $10-a-day. We could have gone back to the Wild West of income-testing for child care. So we’re relieved that there’s still the goal of universal, quality, affordable child care. We cannot have a three-year pause, though,” she said.
Bridgitte Anderson of the Greater Vancouver Board of Trade gave the budget a ‘D’ and said that it doesn’t do enough to attract the kind of business investment the province needs, with GDP growth expected to top out at a meagre 1.3 per cent for the coming year.
“This is a grim budget,” she told reporters. “You look at $4 billion of added taxes, and many of those, including the PST on professional services, are going to impact everybody in British Columbia that does business. It will impact the cost of major projects. It is the cost of doing business that will go up.”
David Williams of the Business Council of B.C. further pointed out that even with those added taxes, the provincial debt is set to almost double again over the coming three years, with the cost to service the debt going up to $1,500 per person.
He said that traditionally the debt servicing costs are around $530 a person.
Small businesses are also hurting, said Ryan Mitton of the Canadian Federation of independent Business, with 63 per cent of B.C. small business owners surveyed by the association saying they wouldn’t start their own business again if given the chance.
Economists like Marc Lee of the Canadian Centre for Policy Alternatives also criticized the tax measures for disproportionately affecting working people.
“I think it’s going to have a negative impact on low-income households, folks who really aren’t able to shoulder that burden right now,” he said. “I think we do need to be having this conversation, given how much debt has increased relative to GDP in particular, but I also think we have a lot of room to go, and the context is that we’re in the middle of the trade war. We’re having a major housing downturn.”
Outside of the tax increases and its impact on people’s wallets, advocates also voiced concern about the government’s plan to cut public service jobs by 15,000 over the next three years, including 2,500 in core government.
Paul Finch, president of the B.C. General Employees’ Union, said he hopes the government will take seriously its commitment to unionized workers and focus the cuts on the ranks of excluded managers and political staff that have grown to new highs under the NDP.
“We want to see that commitment made good. But you know, obviously we’re concerned. Any cut to front-line services, any cut to the unionized employees that provide critical services to British Columbia, it’s not just going to hurt people that most need those services right now. It’s also going to hurt the economy,” he said.
Read more of coverage of the 2026 B.C. budget:
• Higher taxes, more debt: 5 ways the 2026 B.C. budget will affect you
• B.C. Budget: Finance minister delivers a sea of red ink and tax increases
• Vaughn Palmer: Fiscal credibility shredded by Page 1 of B.C.’s 2026 budget
• B.C. Budget: No extra fertility treatment dollars for popular program
• B.C. Budget: LNG a bright spot, but red ink dismays business groups
• B.C. Budget: Pace of infrastructure projects slowing, but spending remains at historic highs
• Brenda Bailey: Budget 2026 is about careful choices — we have to scrutinize every dollar