ICBA ADVOCACY UPDATE: Hidden construction tax, record debt headline NDP Budget

KEY POINTS

• B.C. Budget 2026/27 delivers historic deficits: $36.9BN in red ink over three years, with debt soaring from $91BN to $235BN by end of decade under Premier Eby.
• NDP slaps PST on professional services – engineering, architecture, accounting – creating a hidden construction tax that will show up in every project budget.
• Personal income tax hike pulls half a billion from workers' pockets; bracket creep returns.
• ICBA projects just 34,000 housing starts – far below the government's forecast 44,000.

DEBT AND DEFICITS

The NDP Government released its 2026/27 provincial budget on Tuesday – and as ICBA anticipated, it’s grim reading for B.C. construction businesses.

The budget delivers $36.9BNin deficits over three years ($13.3BN in 26/27, $12.2BN in 27/28, and$11.4BN in 28/29). Since David Eby became Premier less than four years ago, the provincial debt has soared from $91BN to $154BN – and will hit $235BN by the end of the decade.

"This budget, taken as a whole, will do little to bolster economic growth or encourage more capital investment in the province," said ICBA Chief Economist Jock Finlayson."The fiscal picture summarized by the Minister of Finance is sobering and speaks to poor management of the province's public finances under Premier Eby since late 2022. There is no plan to return to a balanced operating budget or stem the steady growth in total government debt as a share of our economy(GDP). This suggests the province's credit rating – which has already deteriorated sharply since 2022 – may face further downgrades."

THE HIDDEN CONSTRUCTION TAX

Beginning October 1st, the Eby Government will add Provincial Sales Tax to architectural services, accounting and bookkeeping, engineering and geoscience services, rental property and strata management services, and commissions on real estate sales on industrial and commercial property. This increases the cost of professional services builders procure on projects and will be factored into bids and project budgets for work starting or extending past that date.

"This government keeps finding new ways to make it more expensive to build. Slapping PST on engineering, architecture, and professional services isn't clever tax policy — it's a hidden construction tax that will show up in every project budget in this province," said ICBA President and CEO Chris Gardner. "Contractors will price it in, but ultimately, the people paying for housing will foot the bill."

INCOME TAX HIKES AND BRACKET CREEP

A personal income tax hike will pull half a billion more out of B.C. workers' pockets. It gets worse: the NDP are reintroducing bracket creep, which punishes workers who move from one tax bracket to another – inflation pushes wage earners into higher tax brackets, causing them to pay a larger percentage of their income in taxes without a real increase in purchasing power.

HOUSING NUMBERS DON'T ADD UP

ICBA is also gravely concerned that the Eby Government continues to underestimate the crisis in LowerMainland homebuilding. While ICBA projects just 34,000 housing starts this year, the NDP claim 44,000 in the Budget documents.

"The Government can claim whatever housing numbers it wants in a budget document, but cranes, permits, and layoffs don't lie. The industry experts and our homebuilder members are expecting far fewer housing starts than the government is forecasting," said Gardner. "That gap isn't a rounding error —it's a policy failure at all levels of government."

ONE SILVER LINING

One of the few positive notes in this Budget is a funding boost for Skilled Trades BC to provide 5,000 more trade spaces. But ICBA cautions that in a slowing economy, this poses its own challenges.

"More trade spaces sound nice, but contractors aren't scrambling to find workers anymore — they're scrambling to find work," said Gardner. "With deficits piling up and project timelines being stretched into the future, the pipeline is tightening. You can train all the tradespeople you want, but if the projects aren't there, the jobs won't be there for these new workers."

STAY TUNED

Watch ICBA.ca/bc-blog for more from Jock, Chris, Jordan and the ICBA team on the B.C. Budget in the days and weeks to come.

ICBA continues our work on these and other advocacy files on behalf of our members – if there’s a public policy or red tape issue your company is facing municipally, provincially, or federally, that you could use some help with, reach out to us at jordan@icba.ca.