B.C. is planning a broad suite of changes to its provincial tax code as part of its latest budget in an attempt to drum up revenue and tamp down the deficit.
It amounts to a total three-year tax increase of more than $4.2 billion.
This includes an income tax hike, the freezing of tax brackets and the end of provincial sales tax exemptions. Roughly 60 per cent of taxpayers will have increased taxes.
The main tax hike will increase rates for the lowest tax bracket from 5.06 per cent to 5.6 per cent. This will be accompanied by a tax rebate increase of $115 per year to insulate low earners.
The lowest tax bracket applies to the first $50,363 earned. The increase is added at this level to ensure across-the-board increases for those earning more. If it were instead only applied to the next level, from $50,363 to $100,728, those earning less than that full amount would only pay a partial increase.
For example, if a person earned $60,363 in that scenario, they would only pay increased taxes on just $10,000.
The introduction of an expanded rebate protects lower earners, but only up to a point. That rebate is fully available to people earning less than $25,570 per year. It phases out completely at $44,950, above which no credit is received.
Overall, the government estimates that 40 per cent of British Columbians will see their taxes actually lowered because of the rebate. The overall average per person increase in 2026 will be approximately $76.
The maximum increase will be $201, paid by people earning more than $140,000 per year.
This increased rate will be applied to paycheques starting July 1. This tax hike is expected to bring in $476 million in the first year, rising to $513 million by 2028/29.
These efforts to raise revenue will not stop the rising tide of debt — projected to hit $183 billion next year and $234 billion by the end of the decade — and taxpayer groups are crying foul.
“This budget is very bad news for taxpayers,” said Carson Binda, B.C. director for the Canadian Taxpayers’ Federation. “The finance minister just took a dry forest of public finances and threw a cigarette out the window.”
Other tax changes
The income tax changes are part of a broader tax overhaul.
The introduction of a provincial sales tax (PST) for services and the elimination of exemptions will actually bring in even more revenue than the income tax changes.
The addition of a tax for services ends an exception dating to the introduction of PST in 1948, when it was introduced as a sales tax for goods only.
These changes bring B.C. in line with some other provinces, and most closely resemble Saskatchewan’s system.
Impacted services include accounting and bookkeeping; architecture, engineering and geoscience; non-residential real estate sales; security and private investigation; and rental property and strata management.
For architecture, engineering and geoscience, only 30 per cent of fees will be taxed.
Other sales tax changes include the end of exemptions to materials used to make clothing, services related to footwear, basic cable and landline fees. Basic laundry fees will remain exempt.
These changes are all effective Oct. 1, so they will only bring in a combined $284 million the first year. This jumps to $578 million next year and $606 million the year after that.
The government did not consult with impacted industries before announcing these changes. Some representatives and stakeholders are not pleased.
Ryan Mitton, of the Canadian Federation of Independent Businesses, says it sends the wrong message about investment.
“These are critical occupations, and these taxes are going to get passed on through the system,” Mitton said.
Todd Stone, president of the Association for Mineral Exploration, said this adds cost and is a step backward for an industry reliant on the services of these types of professionals.
“We’re already one of the least cost-competitive jurisdictions in the world when it comes to mining and mineral exploration,” Stone said. “Why would we consciously add things in a budget that’s just going to serve to further increase these costs?”
The income tax hike will add the second-most revenue, followed by the freezing of the tax brackets.
Normally, the top end of the tax brackets increases with inflation, giving people a break each year and allowing them to earn more money at a lower rate.
Freezing the tax brackets will add $60 million to the coffers next year, but this benefit compounds each year. It is projected that in the 2028/29 fiscal year, it will add roughly $590 million.
Changes to the school tax are expected to account for the fourth-largest revenue boost. The main school tax change will be a rate hike of 0.1 per cent for homes worth $3 million to $4 million, on the portion worth more than $3 million, with an additional 0.2 per cent increase for values over $4 million.
The rates are also being altered to be linked to provincial gross domestic product growth, rather than inflation. Overall, the changes are expected to raise $91 million in the first year and up to $402 million by 2028/29.
The northern and rural homeowner benefit is being repealed, which will save the province $24 million this year and $97 million in the following two years each. This tax benefit was meant to offset the impact of the carbon tax on rural British Columbians. B.C. repealed the consumer carbon tax in the spring of 2025.
Another change will amend the way interest is calculated in the property tax deferment program, saving the government $11 million in the upcoming year, $23 million the next, and $34 million in 2028/29. This program allows people to delay property taxes. It is available to people over the age of 55 and families with children.
And finally, the one-per-cent increase in the speculation and vacancy tax — from three to four per cent — is expected to raise $6 million in the first year, and $23 million in the following two years. These taxes only apply to people selling homes that are not their primary residence.