British Columbia Needs a More Competitive Tax Climate

British Columbia has many strengths. It offers political stability, a highly educated workforce, access to Pacific markets, abundant natural resources, and one of the world's best publicly funded healthcare systems.

Unlike the United States, Canadian employers generally do not bear the cost of providing comprehensive health insurance to employees and their families. Universal provincial healthcare substantially reduces employee benefit costs, improves labour mobility, and provides businesses with predictable healthcare costs. This is a significant competitive advantage that British Columbia should preserve and promote.

At the same time, BC competes for investment with jurisdictions that often have lower business taxes, fewer payroll taxes, and more aggressive investment incentives. Competitive BC believes the province should build on its strengths while addressing areas where it is becoming less competitive.

British Columbia's general corporate income tax rate is 12%, resulting in a combined federal-provincial rate of approximately 27%.

BC also has one of Canada's lowest provincial small business corporate income tax rates at 2%, producing a combined federal-provincial small business tax rate of approximately 11% on qualifying active business income. This is an important competitive advantage for entrepreneurs, family businesses, and growing companies.

Ontario's general corporate income tax rate is 11.5%, while its small business rate is currently 3.2%, with legislation proposing a reduction to 2.2% beginning in mid-2026.

While BC compares well with most Canadian provinces, it increasingly competes with U.S. states that either have substantially lower corporate income taxes or no corporate income tax at all.

Competitive BC believes British Columbia should strive to have the most competitive business tax system in Canada while maintaining the fiscal capacity to fund excellent public services.

Mining remains one of British Columbia's foundational industries.

The province currently offers a 20% Mining Flow-Through Share Tax Credit, helping exploration companies raise risk capital for mineral exploration. This has played an important role in financing junior mining companies and encouraging early-stage exploration. However, tax incentives alone are not sufficient to maintain competitiveness.

Investment decisions increasingly depend on the combined effect of tax policy, permitting timelines, regulatory certainty, access to infrastructure, electricity costs, Indigenous partnership frameworks, and labour availability.

Competitive BC believes BC should modernize its mining tax incentives while streamlining project approvals so that the province once again becomes North America's preferred destination for mineral investment.

Payroll taxes directly increase the cost of creating jobs.

British Columbia's Employer Health Tax replaced Medical Services Plan premiums and helps finance the province's universal healthcare system. Employers with annual BC payrolls below $1 million pay no Employer Health Tax. Between $1 million and $1.5 million, a transitional formula applies, while employers with payrolls exceeding $1.5 million pay 1.95% on total BC remuneration.

Funding healthcare through broad-based taxation provides an important competitive advantage over the United States, where employers often pay many thousands of dollars per employee each year for private health insurance coverage.

Nevertheless, payroll taxes remain a tax on employment. As businesses grow beyond the exemption threshold, the Employer Health Tax increases the cost of hiring additional workers and expanding operations.

Competitive BC believes payroll taxes should be designed to minimize barriers to growth, particularly for rapidly expanding small and medium-sized businesses.

British Columbia has significant competitive strengths: one of Canada's lowest small business corporate tax rates; universal publicly funded healthcare that reduces employer benefit costs compared with the United States; a highly skilled workforce; strong access to Pacific markets; and world-class natural resources.

However, challenges remain. General corporate tax rates remain slightly higher than some competing jurisdictions. The Employer Health Tax increases employment costs as firms scale. Resource investment incentives are increasingly offset by permitting and regulatory uncertainty. Investors evaluate the total cost of doing business — including taxes, regulation, labour policy, and project approval timelines — not any one factor in isolation.

Competitive BC supports tax policies that encourage investment while maintaining the high-quality public services British Columbians value.

Specifically, we support: maintaining one of Canada's lowest small business corporate income tax rates; reducing the general corporate income tax rate to improve competitiveness with Ontario and leading U.S. jurisdictions; preserving universal publicly funded healthcare as a competitive economic advantage; reviewing Employer Health Tax thresholds to reduce barriers to hiring and business growth; expanding tax incentives that attract investment in mining, critical minerals, manufacturing, technology, and value-added resource processing; and publishing an annual Tax Competitiveness Index comparing British Columbia with Alberta, Ontario, Washington, Idaho, Utah, Nevada, Oregon, and other leading investment jurisdictions.

Economic growth depends on attracting investment. The jurisdictions that create the best conditions for private investment are the jurisdictions that generate the jobs, innovation, and tax revenues needed to fund excellent public services. British Columbia should aim to be one of them.