Dear Members,
Yesterday, the Province of Prince Edward Island released its 2026–27 Operating Budget.
In our pre-budget submission, the Chamber focused on two core priorities: strengthening workforce participation and improving tax competitiveness. These are not new issues, but they are becoming more urgent. This budget does not meaningfully address either.
There are some positive elements in the budget in the form of re-targeted affordability measures, including the new PEI Essentials Benefits, that will provide relief for Islanders within certain income thresholds, and programs like $10/day daycare remain in place, supporting workforce participation. The budget commits increases for BioFoodTech, and trade and export development. However, there do not seem to be new measures to drive the type of growth we need to sustain the level of expenditures outlined.
WORKFORCE
This budget primarily reflects continuity, not change. Most line items in this budget remain largely status quo. We acknowledge that workforce development seems to benefit from some increases, which is a step in the right direction, but more needs to be done. At a time when approximately 24,900 working-age Islanders are not in the labour force, alongside 30,000 individuals of retirement age, and considering the highest own-source revenue line for the province is personal income tax collected, a more targeted focus on increasing workforce participation would benefit future budgets. Without new approaches or targeted incentives, and considering existing policies meant to slow population growth, we need more investment in developing our home-grown workforce, not more of the same.
TAX COMPETITIVENESS
On tax competitiveness, there are no real structural improvements. PEI continues to operate with a general corporate tax rate of 15% which is tied with NFLD for the highest in the country, while also remaining the only province without automatic tax bracket indexation. Government is presenting this budget as focused on affordability. Indexation would help affordability measures and consumer confidence across all income levels.
At the end of the day, long-term growth and service sustainability require a stronger, more competitive business environment and a larger workforce. What we are getting instead is a growing deficit and an increased pressure on businesses to do more with shrinking margins.
FINAL THOUGHTS
Budgets are about choices and this one reflects a decision to hold the line with the projected deficit approaching $410 million, net debt nearing $4.5 billion, and debt servicing costs now exceeding $200 million annually; a decision that puts PEI’s credit rating at risk of downgrade, which will only increase debt serving costs and make it more difficult to balance future budgets.
A positive take-away is that this budget appears more realistic than last year’s. In 2025–26, the Province moved from an initial deficit forecast of $183.9 million to almost $450 million. This year’s projection better reflects current spending realities.
The Chamber’s recommendations remain focused on practical, high-impact actions to support long-term growth. We encourage members to join our Advocacy Task Forces as we take deeper dives into these issues and continue to push for the changes needed to support business growth in PEI.
As always, thank you for your continued commitment to our business community.
Warm Regards,
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Bianca McGregor CEO, GCACC |
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