Wellington County councillors have agreed to raise council salaries by a total of almost $190,000 to compensate for a federal decision to end a tax break for local politicians.
On Nov. 28, council approved a recommendation from the administration, finance and human resources committee to increase councillors’ gross salaries in January 2019, to offset increased tax payments, thus ensuring their net pay remains the same.
In its budget last March, the federal government announced that effective in January of 2019, it is ending an exemption that allowed one-third of the salary paid to an elected member of council to be classified as “expenses incurred in the discharge of the member’s duties.”
As such, this portion of a councillor’s salary was not subject to income tax.
To maintain the exemption, the Municipal Act previously required each council to review the option to exempt one-third of the salary at least once during each four-year term of council after a regular election.
Wellington County council opted to maintain the exemption for the current council in January 2015.
The federal tax exemption has been in place since 1947 under the Income Tax Act.
A staff report from county clerk Donna Bryce notes the Association of Municipalities of Ontario is lobbying the federal government to reconsider the change.
“There will be an increased cost to municipalities, whether elected officials maintain their same net or gross pay, through mandated employer contributions to the Canada Pension Plan, Employer Health Tax and to OMERS,” Bryce notes in her report.
A staff report presented to county council in March indicated that making council remuneration fully taxable but adjusting gross salaries to maintain the same net pay, would increase the total cost of remuneration by $188,233, including the employer portion of benefits and loss of GST/HST rebate.
The report stated the warden’s salary would need to rise from $89,414 to $123,510 and councillors’ pay would have to go from $32,868 to $38,512.
