Wellington County councillors will continue to receive one-third of their salaries as a tax-free allowance.
Council opted to keep the allowance, available to all municipal councils, in place after receiving a report from treasurer Ken DeHart at the March 26 meeting.
Since 1990, the Municipal Act has provided that one-third of the salary paid to an elected member of council was deemed to be for “expenses incurred in the discharge of the member’s duties,” and not subject to income tax.
The act also requires the bylaw confirming council’s intention to accept the tax break be reviewed at a public meeting at least once during each four-year term of council.
DeHart’s report showed making council salaries fully taxable would reduce the warden’s net pay by $14,317 and reduce each councillor’s net pay by $3,725.
Converting councillors’ pay to fully-taxable remuneration would also increase the employer portion of Canada Pension Plan (CPP), OMERS and Employer Health Tax contributions.
In addition, the report notes, the county is currently eligible to receive a GST/HST rebate on a third of the remuneration paid as these are considered expenses and not salaries.
The total cost of increased employer contributions and loss of GST/HST rebate would be $50,374.
Making council remuneration fully taxable, but adjusting gross salaries to maintain the same net pay to councillors would require a considerable increase, the report notes.
“The current salary for the warden is $89,414 and councillors is $32,868. If council were to convert the remuneration to 100% taxable while maintaining the same level of net pay after taxes, the annual salary would need to be increased to $123,510 for the warden and $38,512 for a councillor,” the report states.
“This option would increase the cost of remuneration to the county by $188,233 including employer portion of benefits and loss of GST/HST rebate.”
The report concludes there is “no financial incentive” to move away from the tax-free allowance.
“Options to change the pay of elected officials to fully taxable increases the cost to both county councillors and Wellington County taxpayers,” the report states.
“Given the impact on remuneration, I agree we should maintain the option we have now – that one-third be tax free,” said administration and finance committee chair councillor Dennis Lever.
