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Split Decision

by Olivia Rutt and Jaime Myslik

Tax-free income for municipal councillors

Income luxury

The federal budget, which was announced last week, will be taking away a tax exemption probably few of us know about.

By 2019, municipal councillors will no longer have tax-free income for one-third of their salary.

This tax exemption was first enacted back in 1990 to offset expenses incurred during a councillor’s duties.

But as we see with the 2016 remuneration reports now out from most, if not all, Wellington County municipalities, councillors are already being compensated for expenses incurred during their faithful public service.

So why are councillors even provided this tax break anymore?

There is no doubt councillors earn the money they are being paid, but the tax break no longer fits with how they should be  compensated.

However, Warden Denis Lever suggested ending the tax exemption would cost local taxpayers more because salaries would have to increase so councillors can take home the same net earnings without it.

The idea of an increase is preposterous. Not every worker has the same luxury as councillors - to choose their income when the government implements a new tax.  

Councillors shouldn’t look at this as lost income; it should be viewed as a tax break they were afforded that is coming to an end.

They should have to live with it, just like the rest of Canadians do come tax time.

– Olivia


VS.


Municipal burden

The Liberal government’s second budget is doing away with income tax exemptions for 33% of municipal councillors’ salaries.

This exemption is provided under the guise of covering costs incurred while performing municipal duties, yet councillors are also paid expenses.

Regardless of the whys and hows, this was steady funding the federal government provided municipalities. What will happen in 2019 if it’s actually taken away?

Let’s step back to the late 1990s when the province axed the farm tax rebate.

Prior to 1998, Ontario farmers paid their municipality 100% of their property taxes and the province gave them a 75% rebate. Fast forward to post-1998 and farmers now pay just 25% of their assessed property tax to their municipalities and the province has no involvement.

It looks like the government is messing with municipalities once again, this time at a federal level.

Come 2019, Warden Dennis Lever says local councillors will likely expect no reduction in take-home salaries. But wait. Without the 33% tax exemption, municipal taxpayers will be left with the responsibility, once again, to pick up the pieces after a higher level of government pulls the rip cord.

Don’t be fooled. We may be “saving” in federal taxes but small municipalities are going to be hit hard trying to once again compensate for a government contribution that was taken away.   

– Jaime

Vol 50 Issue 13

 
 

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