B.C. legislative committee urges repeal of PST expansion to more real estate services | Daily Hive

B.C. legislative committee recommends repeal of PST expansion to more real estate services

January 2026 construction progress on additional residential tower phases of The Amazing Brentwood in Burnaby. (AlbertArt/Shutterstock)

With roughly a month and a half before the Government of British Columbia is set to start charging Provincial Sales Tax (PST) on a new range of professional services, a legislative committee is calling on the provincial government to cancel the revenue-driven expansion.

This week, the legislature’s Select Standing Committee on Finance and Government Services made the recommendation in its final report on consultations for the 2027 budget, after receiving nearly 400 presentations and more than 1,100 written submissions from across the province in recent months.

Among its 81 recommendations, the committee explicitly calls on the BC NDP-led provincial government to “Repeal the planned Provincial Sales Tax expansion to professional services to simplify and streamline taxation systems.”

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This recommendation does not itself cancel the tax changes. The expansion of the PST’s application into more areas of the economy was included early this year in the provincial government’s 2026 budget and remains scheduled to take effect on Oct. 1, 2026, unless Premier David Eby’s administration changes course before then.

Under the changes announced in the 2026 budget, the seven per cent PST will be extended to accounting services, including bookkeeping and assurance services, security and private investigation services, and various non-residential real estate services. Architectural, engineering and geoscience services will also become taxable, although the seven per cent PST will apply to only 30 per cent of the price for those services.

The provincial government has argued the expansion modernizes a tax system created when the economy was much more focused on goods rather than services.

It is also a sizeable revenue measure. The 2026 budget estimated the professional services expansion would bring in an additional $261 million in the 2026/2027 fiscal year, based on a start in October 2026, followed by $534 million in 2027/2028 and $563 million in 2028/2029.

But the proposal has faced sustained opposition from business groups, which argue B.C.’s PST is particularly costly for businesses because there are no broad input tax credits allowing companies to recover PST paid on the goods and services they need to operate. That can cause the tax to become embedded at multiple stages of doing business — commonly described by critics as “tax cascading” or a “tax on a tax.”

The Chartered Professional Accountants of British Columbia told the committee that this structure raises costs and discourages investment, while the Tax Executives Institute went as far as recommending that B.C. replace the PST with a Harmonized Sales Tax (HST). However, the committee did not recommend switching back to B.C.’s historically controversial HST.

The Greater Vancouver Board of Trade welcomed the committee’s call to reverse the PST’s professional services expansion.

“We welcome this recommendation and hope the government listens to the Committee and to the thousands of British Columbians, businesses, and organizations that have raised concerns about this proposal,” said Bridgitte Anderson, president and CEO of the Greater Vancouver Board of Trade, in reaction to the committee’s final report.

“At a time when businesses are facing rising costs, economic uncertainty, and growing competitive pressures, the Province should be looking for ways to improve affordability and encourage investment, not expanding the PST and creating a new tax on tax on the services that businesses rely on every day.”

The committee report reflects similar concerns raised during its public consultations. The Canadian Federation of Independent Business told the committee that 80 per cent of businesses it surveyed opposed the professional services expansion, with 72 per cent saying they were likely to pass the additional cost on to customers.

Building owners raised concerns about higher commercial property operating costs, while electrical contractors said taxing engineering and architectural services would make construction more expensive, including for government-funded projects.

The BC Real Estate Association similarly argued that adding PST to commercial real estate services could increase costs throughout the development process, potentially making some housing projects harder to finance. The committee ultimately noted that it had repeatedly heard concerns from businesses across multiple sectors that the added costs would eventually reach consumers.

The Conservative Party of B.C. also seized on the recommendation, renewing its demand for the BC NDP-led provincial government to abandon the changes.

“The government needs to listen and scrap this tax hike,” said Peter Milobar, the MLA for Kamloops Centre and the B.C. Conservatives’ shadow minister for finance.

“The PST expansion was the move of a government that is desperate for cash. But you don’t fix B.C.’s finances by making it more expensive to run a business, build a home or even make or repair your own clothes.”

Donegal Wilson, the B.C. Conservative MLA for Boundary-Similkameen and deputy chair of the legislative committee, said the recommendation reflected what members heard during the budget consultation.

“During budget 2027 consultation, British Columbians told us loud and clear: they want this tax hike gone,” said Wilson.

“The B.C. Conservatives have been pushing for this tax hike to be repealed from the start. Now the committee has agreed. The ball is in the NDP government’s court. It’s time to listen to British Columbians and scrap the tax hike.”

There is an important distinction, however, between the committee’s recommendation and the broader PST changes criticized by the Conservatives.

The 2026 budget also separately eliminated existing PST exemptions for clothing patterns, yarn, natural fibres, synthetic thread, and fabric commonly used to make or repair clothing, as well as certain clothing and footwear services. Exemptions for basic cable television, toll-free telephone services, and residential landline telephone services are also scheduled to disappear on Oct. 1, 2026.

The legislative committee did not recommend repealing those separate changes. Its recommendation specifically targets the expansion of PST to professional services.

The committee made two other PST-related recommendations. It wants the provincial government to raise the threshold at which higher PST rates apply to luxury vehicles, noting that the threshold has not kept pace with rising vehicle prices. It also recommends restructuring the PST treatment of rental vehicles by closing an exemption on vehicles purchased by rental companies and instead applying a flat seven per cent PST based on what a customer pays to rent a vehicle, rather than its value.

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