Hello members: 

I am writing to provide you with a clear, plain‑language overview of British Columbia’s 2026 Provincial Budget, and what it means for small businesses on the North Shore (and BC as a whole).

This letter is intended to help you understand the headlines and real‑world impacts this budget may have on your business costs, your customers, and the broader business climate we operate in.

The provincial government has framed Budget 2026 as a plan for “Securing B.C.’s Future.” In practice, the budget reflects a province under financial strain, facing slower economic growth, rising costs, and growing pressure on public services. While there are some targeted investments that matter to business districts like ours, many business organizations across British Columbia have raised serious concerns about affordability, competitiveness, and the long‑term fiscal direction of the province.

The Big Picture: Deficits, Debt, and a Slowing Economy

At the highest level, Budget 2026 confirms that British Columbia is running large and ongoing deficits. The province is projecting a deficit of approximately $13.3 billion in 2026–27, followed by deficits of $12.2 billion and $11.4 billion in the following two years. Total provincial debt is expected to rise to roughly $235 billion by 2028–29. As debt grows, so do interest costs, which are projected to consume more than eight cents of every dollar the province collects in revenue within three years. the unknown in this equation is whether the province will see a downgrading of the provincial credit rating. If this were to occur, it could lead to higher interest rates being charged on our debt, resulting in higher debt servicing costs to government and potential increased taxation and fees to recover those costs. 

Economic growth assumptions are modest. The government forecasts real economic growth of about 1.3% in 2026, with gradual improvement later in the fiscal plan. For small businesses, this matters because slow growth combined with rising government costs often leads to increased taxes or reduced public support down the road. In simple terms, there is less financial room for new programs without asking households and businesses to pay more.

Tax and Cost Changes That Affect Small Businesses

The most direct impacts on small business in Budget 2026 come from changes to the tax system. Rather than broad spending cuts, the province has chosen to raise revenue by expanding and adjusting existing taxes.

One of the most significant changes is the expansion of Provincial Sales Tax (PST) to certain professional services, effective October 1, 2026. Services commonly used by small businesses—such as accounting, bookkeeping, consulting, engineering, security, and some property‑related services—will now be subject to a 7% PST. For many small businesses, these are not optional services; they are core operating expenses. This change increases the cost of doing business and forces owners to make difficult choices: absorb the cost, pass it on to customers, or cut back elsewhere.

The budget also increases the lowest personal income tax rate and freezes income tax brackets. While this does not directly target businesses, it may have a knock on effect for consumers, reducing disposable income for many households. When customers have less money to spend, our local restaurants, retailers, and service businesses often feel the impact first. Business organizations across BC have warned that this combination quietly raises taxes over time, even when wages are not keeping pace with inflation.

Additional changes highlighted in budget summaries include increases to the Speculation and Vacancy Tax in future years, higher additional school taxes on high‑value properties, and the removal of certain PST exemptions. While some of these measures are aimed at housing or higher‑value assets, they can still affect commercial landlords, property owners, and mixed‑use areas like the North Shore.

Where the Budget Invests – and Why It Matters

While much of the reaction to Budget 2026 has focused on tax increases, there are also targeted investments that can matter to business districts.

The budget introduces a temporary 15% refundable investment tax credit for manufacturing and processing equipment, beginning April 1, 2026. Business groups have generally welcomed this measure, noting that it may help certain sectors reinvest and remain competitive. However, its benefits are limited to specific industries and will not directly assist most main‑street businesses.

The province has also allocated funding to increase permitting capacity across government. The stated goal is to reduce delays and duplication that slow down housing, infrastructure, and business investment. While this is a positive signal, many business organizations have stressed that the real test will be whether permitting timelines actually improve at the local level.

Public safety is another area of investment relevant to BIAs. Budget 2026 commits $139 million over three years to initiatives targeting repeat violent offenders and chronic property crime. Programs such as the Chronic Property Offending Intervention Initiative are intended to address issues that directly affect business owners, staff safety, insurance costs, and customer confidence in commercial areas. it should be noted these are enforcement oriented programs and do not address street entrenchment issues which may exacerbate the issue.

Housing remains a major area of spending, with billions allocated to capital investments over the next three years. At the same time, municipal and business groups have noted that housing investment levels are lower than expected and are occurring alongside rapidly growing provincial debt. This has raised concerns about long‑term sustainability and the downstream impacts on local governments and service delivery.

What Small Business Organizations Are Saying

Reactions from the small‑business community across British Columbia have been largely critical. The Canadian Federation of Independent Business (CFIB) has stated that Budget 2026 increases taxes for businesses and households while offering limited relief for the cost pressures facing entrepreneurs. CFIB has specifically pointed to the PST expansion on professional services, the personal income tax increase, and the size of the projected deficit as risks to business confidence.

The Greater Vancouver Board of Trade issued a “D” grade for the budget, citing more than $4 billion in new taxes, rising debt, and a lack of a clear plan to restore fiscal balance. While acknowledging positive elements such as the manufacturing tax credit and some public safety funding, the Board concluded that the overall impact of the budget weakens British Columbia’s competitiveness.

The BC Chamber of Commerce has echoed these concerns, warning that higher operating costs will ultimately be borne by consumers, employees, and small business owners. Across these organizations, the common message is that while targeted investments are welcome, the cumulative effect of new taxes during a period of slow growth creates real risk for local economies.

Here at the North Shore BIA and by extension at BIABC, we are very concerned that Government continues to ignore small business on policy and decision making, which is the life blood of neighbourhoods and smaller communities across BC. According to the Province of BC’s own data: 

“Small business are foundational to the B.C. economy:
In 2023 small businesses — defined as firms with fewer than 50 employees — made up about 98 % of all businesses in British Columbia and contributed roughly 34 % of the province’s GDP, one of the highest provincial shares in Canada. They also employed about 41 % of the B.C. workforce, representing over 1.1 million jobs, and accounted for about 30 % of provincial exports, illustrating their role in both domestic employment and international trade”

We continue to request the province restart the small business round table, establish a Ministry for Small Business and actively engage business in the conversation about creating a vibrant future for British Columbia.  

What This Means for the North Shore

For NSBIA members, Budget 2026 reinforces several realities:

First, the cost of doing business in British Columbia is rising, particularly for businesses that rely on professional services.

Second, consumer spending may be under pressure as household taxes increase.

Third, government finances are increasingly constrained, which means advocacy and evidence‑based engagement with decision‑makers matter more than ever.

At the same time, the budget underscores the importance of strong, well‑resourced BIAs. Investments in public safety, permitting reform, and economic development will only translate into real improvements if local business voices are heard and included in implementation.

NSBIA will continue to advocate for practical, balanced policies that recognize the essential role small businesses play in community safety, employment, and economic resilience. We will also continue working with municipal and provincial partners to ensure that decisions made in Victoria reflect the realities on our streets.

As always, we welcome your feedback and encourage you to reach out if you would like to discuss how these changes may affect your business.

Sincerely,

Jeremy Heighton
Executive Director
North Shore Business Improvement Area Association

Footnotes / Sources

1. Government of British Columbia, Budget and Fiscal Plan 2026/27–2028/29.

2. Government of British Columbia, Budget 2026 Fiscal Summary and Tables.

3. Canadian Federation of Independent Business, Budget 2026 media release and analysis.

4. Greater Vancouver Board of Trade, BC Budget 2026 Report Card.

5. BC Chamber of Commerce, Budget 2026 statement.

6. Economic Development Highlights of the 2026 BC Budget.

7. Union of BC Municipalities, Budget 2026 analysis.

8. BIABC – Op-ed and Releases, BC Budget 2026