You can try to frame a budget in a nice way, but you can’t escape the math

You can try to frame a budget in a nice way, but you can’t escape the math

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Suspension bracket indexation — for 2027 through 2030 — is particularly concerning since it is an indirect tax increase. Indexation exists to prevent fiscal drag, whereby inflation pushes taxpayers into higher brackets even though their real purchasing power has not increased. Nominal income growth automatically generates additional tax revenue when indexation is paused, which disproportionately affects lower- and middle-income earners.

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Fiscal drag is politically convenient because it avoids headline rate increases while expanding revenue quietly. Other provinces have employed similar tactics in recent years, as has the United Kingdom, where frozen personal allowance thresholds generated billions through fiscal drag. This kind of indirect tax increase is shameful.

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The B.C. government is also broadening its provincial sales tax base to include services such as accounting and bookkeeping, architecture, engineering and many others. And it is proposing to increase property taxes on certain homes and increase the speculation tax for certain foreign owners by one per cent.

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The amount of tax increases is shockingly tone-deaf since most Canadians are mightily struggling with affordability matters.

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How will all of this be sold? Well, that’s where the second R, ‘riting, is applicable.

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Jeremy Bentham, the English philosopher and founder of modern utilitarianism, in the late 18th century coined the phrase “springs of action,” the linguistic and motivational forces that influence behaviour. He understood that words are often selected not to neutrally describe reality, but to shape perception.

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For example, the B.C. budget describes the capital project deferrals as “strategically sequencing the capital plan” and “adjusting the timing of delivery.” Nice-sounding language, but in plain fiscal and neutral terms, this means that projects are being postponed because the province’s borrowing capacity and cash flow are constrained. Reframing the delay as a strategy is managing political reaction.

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The same applies to the tax language. A “pause in indexation” sounds technical and temporary, but in economic terms, it is a revenue measure that allows inflation to increase effective tax burdens without formally raising rates. The $76 “average” personal tax increase sounds modest, but obscures the distributional reality.

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Bentham understood that language shapes perception. In fiscal policy, carefully chosen words can make tax increases and other measures sound benign before their real impact is felt. Once that principle is understood, you can clearly see that the B.C. government is trying to balance elevated spending with broadened taxation and carefully calibrated its messaging to soften the impact.

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Next, the final R — ‘rithmetic. Most provincial budgets over the next while will be running deficits. But B.C.‘s trajectory — the size of its deficits, the pace of its debt accumulation and the breadth of its tax measures — most certainly places it among the most aggressive. It’s not merely cyclical weakness, but instead reflects structural imbalance. The arithmetic is not subtle. The trajectory is structural, not temporary.

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As former U.K. prime minister Margaret Thatcher once said, governments eventually confront arithmetic. There are only two choices when spending growth outpaces economic growth: materially restrain expenditures or expand taxation directly or indirectly.

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