A Bigger Government, A Bigger Bill

The provincial government’s recent budget was framed as a plan to protect services and invest in people.

In reality, all it actually delivers is higher taxes, historic deficits, and a dramatic expansion of government control over the economy.

Let’s start with what the budget means for you directly.

First, the government is raising income taxes on every single British Columbian.

They’re doing so by increasing the bottom tax rate (not the top tax rate!) from 5.06% to 5.60%.

That might not sound like much, but remember, the bottom rate applies to the first $50,363 of taxable income - meaning this hike will cost many taxpayers almost $300 extra a year - including those who can least afford it.

This isn’t a tax increase on “the wealthy” - it’s a tax increase on ordinary workers.

But wait, it gets worse.

The government is also bringing back bracket creep.

The government is “pausing” the indexation (ie: inflation adjustment) of income tax brackets and non-refundable credits from 2027 until 2030.

When tax brackets aren’t adjusted for inflation, people pay more tax even if their real purchasing power hasn’t increased.

It’s a hidden, automatic tax increase, built right into the system, that you’ll now get hit by every single year.

We also put “pausing” in quotes because:

1. There is never any guarantee that a temporary government program will actually be undone.
2. Even if indexation is restored, the inflation adjustment would resume from the new lower level, meaning you’ll always be paying more than you were in 2025 - it just won’t be getting even worse every year anymore! 

The government is also hiking a number of taxes covering everything from professional services to the vacancy tax, home-flipping tax, and the additional school tax, as well as hiking the interest rate on deferred property taxes.

All of these changes are being described as targeted at the rich, but as we’ve seen with all their other promises, the government’s tax policies always end up affecting regular British Columbians as well.

Of course, tax hikes are only one side of the story.

The government’s spending trajectory is even more concerning.

The budget projects a $13.3 billion deficit next year, with multi-billion-dollar deficits continuing through 2028/29.

Over that same period, total provincial debt is forecast to skyrocket to $234.6 billion.

That represents an extraordinary increase in just a few short years.

That debt will mean higher interest payments that crowd out core services, it will mean future tax hikes become more likely, and it means less flexibility for any future government when the next economic downturn hits.

On the capital budget side, the province has spread out planned spending over more years.

This gives the impression that money is being saved, without the government having to actually cut anything.

Then, in future years, this lack of infrastructure investment will no doubt be used as a justification for needing even higher taxes to help "catch up".

(Or, if a future government refuses to do so, they’ll get blamed for decisions that are actually being made today.)

As for good news, there isn’t much.

The government has committed to reducing the size of the public service by 15,000 positions.

That might sound positive, but they’ve already backtracked a bit and clarified that these “cuts” will come only from retirements and attrition over time.

Besides, the public service has grown by about 80,000 full-time equivalent positions since 2020, so a 15,000 reduction is barely a drop in the bucket.

Overall, this budget reflects a philosophy where spending must always be increased, where taxes can always be increased to pay for it, and if tax increases still can’t keep up with the spending, debt can always be accumulated and left behind as someone else’s problem.

At the British Columbia Institute, we believe there is a better path - one rooted in fiscal discipline, lower taxes, competitive markets, property rights, and an entrepreneurial approach to government that allows families and businesses to thrive.

We will continue analyzing this budget, holding decision-makers accountable, and advocating for reforms that restore balance before the debt burden becomes permanent.

If you value limited government, economic freedom, and responsible public finances, please consider making a donation today to support our work.

British Columbia’s future depends on it.

Thank you for standing with us.