February 17, 2026 l Dalena Reporter
The Government of British Columbia (B.C.) has introduced a new budget for 2026/27 that includes income tax increases and other revenue changes while projecting a record-high provincial deficit of about $13.3 billion, prompting concern among business groups and residents across Canada’s Pacific Province.
Tax Changes and Deficit Figures
Finance Minister Brenda Bailey announced that the income tax rate on the lowest provincial tax bracket will be raised by 0.54 per cent, to 5.6 per cent, meaning many taxpayers will pay more in provincial tax. Officials say the changes are aimed at improving long-term revenue stability, and low-income earners are expected to receive some offsetting tax credits.
Despite the additional revenue measures, B.C.’s budget deficit is forecast at about $13.3 billion for the 2026/27 fiscal year, the largest shortfall in the province’s history. This reflects continued pressure on public finances even as the province attempts to raise revenues and restrain spending.
Economic and Business Reaction
The Greater Vancouver Board of Trade, a major regional business organisation, gave the budget a low “D” grade — its poorest evaluation in over six years warning that the combination of tax increases and growing deficits could dampen economic competitiveness and discourage investment in the province. The association was particularly critical of expanded tax coverage, such as extending the Provincial Sales Tax (PST) to professional services starting October 2026, which it said will affect many businesses and raise costs across sectors.
Wider Budget Measures
Aside from tax changes, the new plan includes adjustments in government spending, with cuts to some capital projects and public-sector staffing reductions seen as part of the government’s effort to manage finances. Large initiatives including infrastructure such as care homes, hospitals and student housing have been slowed or re-timed to balance fiscal pressures.
Why It Matters
The budget arrives amid broader economic uncertainty for provincial governments across Canada, which have faced persistent inflationary pressures, service demands and changing revenue streams. B.C.’s record-high deficit and tax changes are likely to be debated among policymakers, economists and residents as the province seeks to balance long-term financial sustainability with economic growth and public service needs.