BC Premier’s Bid for One of World's Highest Tax Rates Hits an Obstacle: Voters

David Eby launched British Columbia’s election campaign by arguing he needed a mandate to fight Donald Trump’s trade war. Economists warn his push for one of the world’s highest tax rates on top earners would hurt the province’s competitiveness in the middle of that battle.

Eby promised to hike taxes for higher earners by raising rates on all income above roughly C$190,000 ($133,800) and proposed a new tax bracket on incomes over C$1 million. When combined with federal taxes, the top marginal income tax rate would reach 57.5%.

The proposal has become a flashpoint in a campaign centered on economic issues. Supporters say higher taxes on top earners would help shore up government finances and fund public services. But that argument isn’t getting the traction Eby hoped: with nine days until the vote, his New Democratic Party is trailing in public opinion polls.

Opponents say the move risks driving away investment and talent at a time when the province is betting on both a growing technology sector and natural-resource projects to fuel growth.

“If we are to displace some of the American influence on our economy, that starts with making use of all the talent we already have,” said Kevin Milligan, an economist at the University of British Columbia. “I’m not sure the best strategy is to beat up on some people who are doing well here.”

Eby called an early election despite already holding a narrow majority government. He hoped to capitalize on leadership turmoil within the opposition Conservative Party, but the strategy has not worked so far.

The Conservatives quickly chose lawmaker Lorne Doerkson as interim leader, and several defectors returned to the fold. They now lead the NDP by four percentage points and would likely win a majority government if an election were held today, according to poll aggregator 338Canada. Voting day is Oct. 24.

Shachi Kurl, president of the Angus Reid Institute, said her polling suggests voters view the election as unnecessary and opportunistic, and Doerkson swiftly neutralized Eby’s effort to paint him as a Trump ally. In fact, while Eby has tried to frame his campaign around the need to protect the economy from US tariffs, British Columbians rank that issue as the 11th most important to them. Cost of living, healthcare and the economy are all more pressing, Kurl said.

While Kurl hasn’t yet polled on the tax proposal, she said it risks alienating a core part of the NDP’s base: educated professionals in the Vancouver region in their 30s and 40s.

She’s already heard pushback, with people saying things like: “‘I’m a professional. I’ve got a mortgage to pay. I’ve got little kids. I’ve got a household to run.’ This isn’t so-called rich people,” she said. “Wallet issues are profoundly motivating voter issues.”

The concern may be especially acute in Vancouver, Canada’s most expensive housing market. National Bank of Canada estimates a household needs an income of C$265,618 to qualify for a mortgage on a median-priced home in the city.

Record Deficit

Eby has defended his plan as a modest tax increase on those most able to afford it, saying it would affect only 4% of BC income earners. The NDP estimates the measure would raise C$1 billion annually by 2028-29.

The funds could help BC with a worsening fiscal outlook.

The province had a budget surplus when Eby took office in 2022. Since then, spending on healthcare, education, public-sector wages and infrastructure has surged, while a real estate downturn, US lumber tariffs, a series of devastating wildfire seasons and the cancellation of the consumer carbon tax have weighed on revenues.

The province now forecasts a record C$13.8 billion deficit in the fiscal year that ends next March and has been hit with a series of credit-rating downgrades.

Yet some economists say the tax increase is unlikely to generate as much revenue as the government expects.

Trevor Tombe, a University of Calgary economist, estimates the measure would raise roughly C$700 million annually if no one changed their behavior. Once responses such as migration and tax-planning strategies are factored in, the figure drops to about C$200 million, he said.

The province’s top marginal tax rate would rank at or near the highest in the world, depending on methodology, according to the Business Council of BC.

Compared with its closest neighbors, BC’s top rate would be roughly 10 percentage points higher than Alberta’s and more than 20 points steeper than the US state of Washington, Tombe said.

That creates a strong incentive for individuals to move to Washington, he said, or for firms to relocate because otherwise they might have to increase gross pay to high-skilled employees to compensate for higher taxes.

BC would remain one of Canada’s lowest-tax provinces overall by broader measures that incorporate personal, corporate, consumption and property taxes. But Tombe said that doesn’t eliminate worries about economic fallout from raising rates on higher earners, who are more responsive to tax changes than average residents.

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The debate extends beyond tax policy to broader questions about the province’s economic future.

Support for resource development has grown, helping clear the way for a wave of liquefied natural gas developments that will boost exports to Asia. But BC’s technology sector employs more people than mining, energy and forestry combined, Milligan said, underscoring the need for policies that attract and retain skilled workers.

“BC’s strength is not just the rocks and the trees, but also the people we have here,” he said.