Policy Horizon June 2026

Every month, Policy Horizon gives our members a snapshot of where the policy environment stands and where we are directing our advocacy energy. This month, there is no shortage of material. Three issues are front and centre for the Kelowna Chamber right now: the province’s expansion of the Provincial Sales Tax to professional and business services; the street crime and public safety crisis that is costing our members real money every single day; and the growing controversy around the Vintage Replacement Program and how its administration is drifting from its original intent. Each of these issues is distinct, but they share a common thread — government decisions are imposing new costs on businesses that are already carrying more than their fair share of the load.

Let’s take them one at a time.

The PST Expansion: A Tax on Services Nobody Asked For

The Province of British Columbia legislated an extension of its 7% Provincial Sales Tax to a wide range of professional services that have never been taxed before, with the new rules taking effect October 1, 2026. The list of newly taxable services includes legal, accounting, engineering, architectural, environmental consulting, project management — and security services.

On its face, broadening the tax base may seem like a reasonable revenue measure. The Chamber understands that the Province faces real fiscal pressures. But when you look at who will actually bear the cost — and why many of our members are purchasing these services in the first place — the picture becomes far more troubling.

A Tax on Safety

The Kelowna Chamber of Commerce has had to hire private security simply so our staff can safely enter our own building each morning. That is not a discretionary expense. We are not purchasing security because it makes our business more productive or because it serves some strategic purpose. We are purchasing it because the conditions on our streets require it. Across British Columbia, businesses are absorbing costs that were once the province’s responsibility — costs that flow directly from addiction, mental health challenges, public disorder, and gaps in housing and social supports.

Adding a 7% tax to security services — in this environment, in this moment — is not a revenue measure. It is a penalty. It tells employers: we have not solved the problems that are forcing you to protect your own staff, and now we are going to charge you more for doing so.

A Tax on Housing

The PST expansion will also apply to the full suite of professional services that go into housing development — architects, engineers, surveyors, accountants, environmental consultants, project managers. Every housing project requires these professionals before a single permit is issued or a single nail is driven. Under the new rules, all of that pre-construction work will now attract an additional 7% tax.

We have heard from every level of government for years that British Columbia needs more housing, built faster and at lower cost. The business community agrees with that diagnosis. But the PST expansion moves us in exactly the opposite direction.

The logic is simple and unavoidable: when development costs increase, those costs do not disappear. They are passed on — through higher home prices, higher rents, projects that become financially unviable, or projects that never proceed at all. At a time when Kelowna’s population growth continues to outpace housing supply, and when employers are already struggling to attract and retain workers because of housing costs, this policy effectively taxes the very activities that create the new housing supply we desperately need.

If housing affordability is genuinely a supply problem — and the consensus says it is — then every policy should be measured by a simple test: does it make building housing easier and less expensive, or harder and more expensive? The PST expansion on professional services fails that test.

What We Are Asking

The Kelowna Chamber’s Pre-Budget Submission to the Select Standing Committee on Finance and Government Services, filed June 15, calls on the Province to roll back or cancel the PST expansion scheduled to take effect October 1, 2026. We have also asked for a 24-month moratorium on new regulatory compliance costs for businesses with under $10 million in annual revenue, with exceptions only for measures that directly protect health or public safety.

We recognize the Province must find revenue. But taxing the services businesses are forced to purchase because public systems have fallen short — and taxing the services that create the housing British Columbians need — is not sound policy. We will continue to make that case loudly and clearly.

Street Crime and the Cost to Small Business

Security Bills Are Rising. Now Add 7% More.

The timing of the PST expansion on security services is particularly difficult to absorb because our members’ security costs have been rising sharply — not because they chose to invest in security, but because the nature of retail and commercial environments in Kelowna has fundamentally changed.

Theft, vandalism, and intimidation of staff are not nuisances. They are existential pressures for retailers, restaurants, and service businesses. Our members report that retail theft has become endemic in commercial corridors across BC, with some operators losing between 3 and 8 percent of annual revenue to shrinkage. Organized retail crime — coordinated, repeat theft by professional rings — accounts for a growing share of those losses.

The costs are not only financial. Staff are experiencing trauma, turnover, and burnout. Customers are staying away. Businesses are spending on private security, repeated repairs, and rising insurance premiums. Some are closing, leaving gaps in commercial districts that reduce foot traffic for neighbouring businesses and erode the tax base. When a business closes because it cannot sustain the cost of crime, everyone loses — the owner, the employees, the neighbouring merchants, and tax revenue at all three levels of government.

What We Are Asking

The Chamber’s Pre-Budget Submission identifies street crime as Priority 3 and makes three specific asks:

• A dedicated BC Organized Retail Crime Unit within the provincial policing structure — with a mandate to target repeat, high-volume offenders and the fencing networks that profit from stolen goods, coordinating intelligence with municipal police services and retailers.
• A permanent Small Business Crime Recovery Fund — a grants program of at least $25 million annually — to reimburse eligible small businesses for a portion of verified theft losses above $5,000 per year, with priority access for businesses in high-incidence commercial areas.
• Genuine court deterrence through faster case processing, working with the federal government and BC Prosecution Service. The Chamber is asking the Province to fund 50 additional dedicated Crown counsel positions specifically for property crime prosecutions. A system in which chronic retail offenders cycle through the courts without consequence is not a justice system — it is a cost externalized onto small business owners.

In a Globe & Mail article dated June 16, 2026, “Ottawa calls for stricter bail regulation,” Justice Minister Sean Fraser called on provinces to adequately fund their courts to ensure new, stricter federal bail laws are successful — a move the Kelowna Chamber has requested for years to deal with chronic offenders.

Our members are not asking for zero-tolerance policies or the criminalization of poverty. They are asking for a basic level of protection that allows them to operate a business, support their employees, and serve their communities — without absorbing losses that threaten their survival.

The Vintage Replacement Program: When Policy Drifts From Its Purpose

The 120-year-old Kelowna Chamber has been a consistent supporter of the Okanagan wine industry for its entire 94-year existence. The industry is central to the Okanagan’s agricultural identity, its tourism economy, and the livelihoods of thousands of British Columbians. That is why we are raising serious concerns about how the Vintage Replacement Program — a well-intentioned relief measure — is now being administered.

The Background

In January 2024, a catastrophic deepfreeze devastated vineyards up and down the Okanagan valley. Vine mortality ran between 15% and 90%, and grape production dropped by an estimated 96%. The scale of the damage forced wineries into a massive, multi-year replanting effort. New vines take years to produce viable grapes for winemaking.

In response, the Province introduced the Vintage Replacement Program, administered by the BC Liquor Distribution Branch (BCLDB). The program allowed wineries to source out-of-province grapes and grape juice on a temporary basis, providing critical relief to keep businesses open, preserve employment, sustain tourism, and protect BC’s agricultural value-add sector. Hundreds of jobs were saved. The program was accepted in good faith by the industry. Wineries revised their operational, staffing, production, and contractual decisions based on the Province’s commitment to support them through an extraordinary crisis.

What Has Gone Wrong

Two years on, serious concerns have emerged in the practical application of the program’s parameters. The Kelowna Chamber, on behalf of our member wineries, wrote to the Honourable Lana Popham, Minister of Agriculture and Food, on June 11, 2026, to set out those concerns directly. The Chamber also raised the issue when we met with three BC NDP ministers and two Parliamentary Secretaries on June 11; Minister Ravi Kahlon assured us he would communicate our concerns to Minister Popham.

The problems fall into two categories.

1.  Narrow interpretation of “replacement wines”

The BCLDB has interpreted this in an extremely restrictive way — essentially requiring a SKU-for-SKU swap. Wineries that sourced a varietal different from what they had previously sold have had listing requests rejected, even where the sourcing was clearly a reasonable business response to the destruction of their vineyards.

2.  The Olympic Average cap applied too broadly

The program ties annual support to a winery’s “Olympic Average” production volume — the five years preceding the freeze, dropping the best and worst years to become a three-year average. This was originally intended to prevent large wineries that already imported significant volumes from claiming supports for continued production of those imported products. That was a reasonable design choice.

The problem is that the BCLDB has now expanded the scope of the cap to include BC VQA wine and 100% BC-grown wine — products made entirely from BC grapes, with no connection to replacement wine production at all. The Olympic Average cap is based on dollar values, not volumes. As operating costs have increased and prices have risen, many wineries find themselves exceeding the cap while selling the same or fewer bottles. Wineries that grew their domestic product sales — precisely the outcome the government said it wanted to support — are now facing financial penalties for doing so.

What We Are Asking

The Kelowna Chamber’s letter to Minister Popham proposes five concrete remedies:

1. Honour the original intent — ensure that wineries which acted in good faith based on the initial program framework are not subjected to unreasonable fiscal burden.
2. Exclude BC VQA and 100% BC-grown wines — from the replacement wine support-cap calculations, when those wines were produced from BC grapes and are unrelated to replacement wine production.
3. Establish a transparent appeal and variance process — for wineries that exceeded their Olympic Average due to legitimate market demand, tourism recovery, release of prior vintages, or growth in sales unrelated to imported grapes or grape juice.
4. Apply support-cap restrictions only to — the portion of production directly attributable to imported grapes, grape juice, or replacement wine production — not to the winery’s entire product line.
5. (New) Extend the replacement wine sales and support window — beyond the current March 31, 2028 expiry date to at least March 31, 2030 — recognizing how long it takes new vines to produce viable grapes for winemaking, and the acknowledged reality that the sector remains significantly below pre-freeze production levels.

We are aligned with our colleagues at the Penticton and Wine Country Chamber on this matter. Both Chambers fully support accountability and transparency in the administration of emergency relief programs. But government programs introduced during extraordinary emergencies must remain consistent with their original purpose and practical understanding at the time wineries made critical business decisions.

British Columbia’s land-based wineries should not be penalized for successfully selling BC-grown wine, supporting local employment, sustaining tourism activity, and maintaining economic stability during one of the most difficult periods the industry has ever faced.

We note that the BCLDB, which administers the temporary program, reports to Minister Popham.

We ask the Minister to return the Vintage Replacement Program to its original, announced intent — and to do so before more wineries conclude that the province’s commitment to the sector cannot be relied upon.

A Note on the Broader Picture

These three issues — the PST expansion, the cost of crime, and the Vintage Replacement Program — are each significant on their own terms. But together they reflect something our members are feeling acutely: the cumulative weight of operating in an environment where the costs of unresolved public policy failures keep landing on private business owners.

BC’s small business confidence dropped sharply in May, according to Canadian Federation of Independent Business data. The 12-month outlook index fell well below neutral, with the largest drops in long-term confidence in retail, hospitality, and health and education. Cost pressures remain elevated — fuel, taxes and regulatory costs, insurance, and wages are all identified as significant concerns by the majority of respondents. Hiring intentions are negative. These are not abstract statistics; they describe the lived experience of Kelowna Chamber members every day.

The Chamber is also tracking broader national policy issues — US tariffs and their impact on export-dependent sectors including forestry, mining supply chains, agriculture and advanced manufacturing; the internal trade barriers that restrict labour mobility and interprovincial commerce; federal immigration policy and the uncertainty facing temporary workers; and the steel industry’s exposure to US Section 232 tariffs, which have driven Canadian steel exports to the US down sharply in 2026.

We will have more to report on all of these fronts in coming months. In the meantime, the Chamber remains actively engaged in advocating for Kelowna’s business community with all levels of government.

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