The NDP government’s latest budget features a record-high deficit, higher income taxes and a plan to slash spending.
Finance Minister Brenda Bailey tabled Budget 2026 on Tuesday, saying it is about “making careful choices now to avoid more difficult ones later.”
Bailey stressed she does not consider it an austerity budget.
“Now is not the time to make big cuts,” she said.
She said the province is making “strategic investments” in areas such as health care and education and aims to protect front-line public services.
The plan includes nearly $38 billion in taxpayer-supported capital spending, with a focus on health care, schools and transit.
B.C. Conservative finance critic Peter Milobar said the income tax hikes and the expanded PST in the budget are going to impact working families, seniors and businesses.
Here are some of the key takeaways from the 2026 budget:
The deficit is expected to get worse before it gets better
The fiscal plan projects a record $13.3 billion deficit in 2026-27. That’s about $3.7 billion higher than the projected shortfall for the current fiscal year.
But the deficit is forecast to decline gradually over the following two years, to $11.6 billion in 2028-29.
“This budget takes an approach that protects public services and drives down the deficit over time,” said Bailey.
Meanwhile, rising provincial debt means the taxpayer-supported debt-to-GDP ratio is forecast to climb to more than 37 per cent by 2028-29. The ratio measures how heavy the government’s debt load is compared to its ability to pay it back. A higher ratio means debt takes up more of the economy.
Milobar said the B.C. government is digging itself into a hole that will be difficult to crawl out of. He pointed to the rising interest bite, which refers to how much of every tax dollar is used just to pay interest on provincial debt. The interest bite is expected to rise from 4.9 per cent this year to 8.2 per cent by 2028-29.
“There’s no end in sight with this government,” said Milobar.
Taxes are going up
The budget plans to raise the tax rate to 5.6 per cent on the first $50,363 of income. The move is expected to cost the average taxpayer $76 per year.
But Bailey said a $115 increase to the B.C. tax reduction credit means more than 40 per cent of taxpayers will see savings despite the higher tax rate.
Personal income tax brackets and non-refundable tax credits will also be frozen at 2026 levels. That means they won’t rise with inflation, so people earning the same income each year will pay the same amount in tax even as prices go up.
Provincial sales tax will also apply to an expanded range of goods and professional services as of Oct. 1, 2026. The list includes services such as accounting, rental management and security. The province is also doing away with PST exemptions for fabric, yarn and other items typically used to make or repair clothes. Basic cable and landline phone services will also be subject to PST.
Milobar said many of the changes will disproportionately affect seniors, who are more likely to rely on services such as landline phones.
Public service cuts will continue
Bailey said the province remains focused on reducing the size of the public sector while maintaining front-line services. She said the government expects to save $3.5 billion over the next three years by managing spending.
The province plans to cut 15,000 full-time positions over three years, for expected savings of $2.8 billion.
The budget reflects some public sector wage increases, as a new round of bargaining began in 2025-26. The province said it has earmarked contingency funding to prepare for new collective agreements over the next three years.
Paul Finch is the president of the B.C. General Employees’ Union, which represents about 95,000 public sector workers. He said the union will hold the government accountable for its promise not to reduce front-line services.
“In difficult economic times, the people of B.C. rely on public services — health care, child care and public safety. Our members are not the cause of this deficit; they are essential to the solution,” said Finch in a statement.
B.C. delays long-term care homes, other facilities
The province is delaying seven long-term care homes across the province, the second phase of the Burnaby Hospital and Cancer Centre, and student housing at the University of Victoria.
“These are not cancellations,” said Bailey. “This is a recognition of the province’s need to strategically sequence projects to address fiscal pressures.”
Leslie Gaudette, president of the Council of Senior Citizens’ Organizations, said the province needs more long-term care beds. She also expressed concern that there appeared to be no increased funding for at-home care supports.
“That is not helping keep people out of long-term care,” said Gaudette.
The budget includes $2.8 billion in health care funding over the next three years. The government said most of that funding is going toward increasing system capacity, including hiring more health-care workers and expanding hospitals and facilities across the province.
It also includes $131 million for mental health and addictions treatment, mainly targeted at expanding involuntary care spaces.
The province is also earmarking $34 million for its pledge to cover in vitro fertilization treatments for nearly 1,800 families.
What else are we losing?
B.C. is doing away with a northern and rural homeowner benefit as of 2027. The grant offered up to $200 to homeowners outside the Capital Regional District, Greater Vancouver Regional District and the Fraser Valley Regional District.
In 2028, the province also plans to axe a savings grant that provides $1,200 to eligible children’s Registered Education Savings Plans. The province said the B.C. Training and Education Savings Grant has an uptake of less than 50 per cent and disproportionately benefited higher-income families.
