The B.C. government will end its sales tax exemption for used electric and other zero-emission vehicles, a move that was made public as a line-item in a budget heavily focused on absorbing the impact of U.S. tariffs.
The tax exemption, first put in place in 2022, will end May 1, 2025, two years ahead of its scheduled end date. The exemption cost the province $73 million in foregone taxes over the last two fiscal years.
The small change to B.C.'s climate spending was largely overshadowed by a government budget forecasting a $10.9-billion deficit — a new record the province’s finance minister defended as a necessary response to U.S. trade tariffs. The budget includes $4 billion in annual contingencies for each of the next three years to cover “unpredictable costs,” including tariff responses.
“While our economy is built to withstand this threat better than most provinces, the impact would still be severe,” Finance Minister Brenda Bailey said in a speech to the legislature Tuesday.
This year's budget included spending on health care and education, as well as a $110 rebate from the Insurance Corporation of B.C. and an increase in spending for low-income renters of between $400 and $700, provided under the province’s Rental Assistance Program.
Jessica McIlroy, the B.C. policy manager for the Pembina Institute, said the spending plan offered few surprises, especially when it came to funding for the environment and climate change.
“The budget was very much framed around U.S. tariffs and a trade war,” she said. “Climate was definitely put on the back burner.”
According to the budget, the province’s CleanBC program, which houses much of its climate policies, will see relatively static spending over the next financial year. The program is slated for a review, though the terms of that review remain unclear for a program B.C. Conservative Leader John Rustad said he would have cut had he won the 2024 election.
“We’re in a new reality. We have five years to reach 2030 [emission reduction targets]. We have different trade and tariff impacts. It makes sense to look and make sure whether that climate plan meets our needs,” McIlroy said.
Business groups reacted to the budget and U.S. tariffs Tuesday with a sense of pessimism. David Williams, Business Council of B.C.’s vice-president of policy, said the province is likely to see a deepening fiscal hole.
“Record deficits were already a concern, but once the full impact of U.S. tariffs is accounted for, the province’s financial outlook worsens significantly,” he said in a statement.
A recent 10-point blueprint from the group called on the B.C. government to improve tax competitiveness and grow the economy while reducing carbon emissions.
One expected increase in the budget was $100 million in spending earmarked to help people purchase a heat pump over two years, a key request that won the NDP government support from the Green Party caucus following a razor-thin electoral margin.
At the same time, McIlroy said Tuesday's budget largely paved an uncertain path for B.C.’s climate policy and how to fund a transition to a green economy in the coming years.
Last year, Canada saw $8.5 billion in insured losses, an all-time record, according to Catastrophe Indices and Quantification Inc. (CatIQ). That far exceeds the previous record of $6.2 billion set in 2016. In B.C., however, damages from wildfires, flooding and storms were relatively low in 2024 compared to previous years.
Still, the latest B.C. budget listed $351 million in climate-related losses carried over from last year.
“It’s just a reminder,” McIlroy said. “Many of these measures really are about avoided future costs. If we want a strong economy, we need to keep that in mind.”
With files from the Canadian Press
