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B.C. Budget Fails to Stabilise Fiscal Trajectory

GlobeNewswire · GlobeNewswire Inc.

Business Council of British Columbia

Wed, February 18, 2026 at 8:27 AM GMT+9 4 min read

Victoria, B.C., Feb. 17, 2026 (GLOBE NEWSWIRE) – Ahead of the 2026 provincial budget, the Business Council of British Columbia (BCBC) emphasised the need for the province to stabilise its fiscal trajectory by restraining spending and improving conditions for private sector investment and hiring. Today’s budget does not accomplish either of these objectives.

The deficit deteriorates to a record $13.3 billion in 2026/27, $3.1 billion larger than projected in last year’s budget. At 2.9 per cent of GDP, the deficit far eclipses the one during the COVID-19 emergency of 2020/21, when the government ran a deficit of $5.6 billion (1.8 per cent of GDP).

“B.C.’s finances have unravelled at a breathtaking speed over recent years as spending growth has far outpaced revenue growth. Households and businesses also face around $4 billion in tax hikes over three years to try to plug the fiscal hole in a further blow to private sector economic activity,” said David Williams, BCBC’s Vice President of Policy.

We are profoundly disappointed to see major tax hikes at a time when British Columbians can least afford them. B.C. has seen only 6 per cent growth in private sector employment since 2019, compared to a 40 per cent increase in public sector employment. B.C. has also been losing around 50,000 to 70,000 people annually in out-migration to other provinces. These are levels unseen since the mid-1970s and late-1990s. Today’s tax hikes are likely to reinforce these worrying trends and further dampen private sector economic activity.

“The current fiscal plan fails to stabilise the province’s finances” said Jairo Yunis, BCBC’s Director of Policy. “Debt servicing is the fastest growing line item in this year’s budget. Provincial finances remain on track for a fifth consecutive credit rating downgrade that will further increase the cost of debt servicing.”

Despite today’s budget failing to meet the moment, BCBC continues to call for greater discipline over spending growth, and policies that improve conditions for private-sector investment and hiring.

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Highlights from****_ Budget 2026:_

Revenue

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    Total revenues are projected to grow by only 0.5 per cent in 2026/27, despite several major tax hikes, due to weak economic activity and the choice to account for all of the tobacco settlement in last year’s budget.  

Expenses

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    Operating expenses are projected to grow by 4.4 per cent in 2026/27, due to higher healthcare expenditures, debt servicing costs, and contingencies. These are partly offset by lower spending on general government (through modest staffing reductions), natural resources and economic development, and protection of persons and property.
    
     
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    Capital expenses are projected to grow by 9 per cent in 2026/27 to nearly $19 billion.  
      
      
      
    
     
 

 






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_Debt _****and debt servicing costs

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    Taxpayer-supported debt rises to around $190 billion by 2028/29, up 200 per cent from 2021/22. The taxpayer-supported debt-to-GDP ratio climbs to 37.4 per cent by 2028/29, up from 17.5 per cent in 2021/22.
    
     
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    Debt servicing costs rise to $8.7 billion by 2028/29, up 220 per cent from 2021/22.
    
     
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    British Columbians will be paying almost $1,500 per capita per annum in interest on government debt by 2028/29, compared to a long-run average of around $530.  

Tax measures

Today’s budget includes several major tax measures affecting businesses and households:

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    Raising the lowest personal income tax rate (PIT), effectively clawing back a similar federal PIT rate decrease this year. For low-income earners, this is partly offset by an increase to the B.C. Tax Reduction Credit on incomes under $25,570;
    
     
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    Pausing indexation of all PIT tax brackets and non-refundable tax credits for the 2027-29 tax years. B.C. taxpayers will now be pushed into higher tax brackets as their wages rise with inflation;
    
     
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    Expanding the provincial sales tax (PST) to include professional services;
    
     
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    Increasing the school tax, effectively a wealth tax, on residential and non-residential properties;
    
     
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    Increasing the speculation tax from 3 to 4 per cent.
    
     
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    Introducing a small, temporary PST credit for investment in building and machinery and equipment used in manufacturing and processing; and
    
     
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    Aligning the province’s Scientific Research & Experimental Development (SR&ED) credit with recent changes to the federal scheme.

CONTACT: Braden McMillan Business Council of British Columbia braden.mcmillan@bcbc.com

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