Council members here are pondering their response to the looming end to a tax exemption on one-third of their salaries.
Council did not act on a request for direction from staff on Dec. 12.
However, one councillor suggested a reduction in compensation could have negative impacts on the township’s ability to attract candidates for elected office.
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 elected members 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.
In order to maintain the exemption, which has been in place since 1947, 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. Mapleton, like most municipalities, has traditionally done that.
The federal budget document directs the removal of what it calls “a non-accountable expense allowance” and notes, “This exemption is only available to certain provincial, territorial and municipal office holders, and provides an advantage that other Canadians do not enjoy.”
In a written report Mapleton finance director Karmen Krueger stated, “Council should determine whether a review of remuneration should be undertaken, and the form of that review (internal, task force, consultant, etc.) and whether an increase to the base pay should be implemented to keep net remuneration levels at similar levels, or some other level.
“This presents challenges as to what this should look like, as each individual member is personally taxed differently.”
Krueger added the County of Wellington opted to increase council remuneration to maintain net income at the pre-legislation-change level, based on the highest marginal tax rate.
The report points out there will be a financial implication to the township relating to required remittances on the currently-exempt one-third portion, regardless of whether the remuneration changes or not. Based on current council remuneration, the cost to taxpayers will be $5,125 due mainly to CPP, WSIB and Employer Health Tax.
“If a remuneration increase is implemented to maintain net pay at similar levels, this levy impact would increase,” the report explains.
“Something like this affects individual members of council differently depending on their employment situation, whether it’s self-employed, retired, semi-retired or salaried,” said councillor Michael Martin.
“So speaking from my case, I look at this as yet another hurdle that people from my demographic have to work on … You know everyone wants involvement on municipal council from all … demographics; old, young in-between, whatever.”
“So to throw this in,” Martin continued, “in my case I’ll be taxed at probably the highest tax bracket on all of my council income, versus that one third, and while that overall salary, this is certainly coffee money, let’s say.
“Nobody’s here really for the money. If you are, we can talk later, but you know to throw this in now … it’s almost to the point where it’s costing me money to be here or I’m paying to be here.”
In 2016 Mayor Neil Driscoll received total remuneration of $19,471, including a salary of $17,280 and meeting per diems of $1,030.
Mapleton’s four councillors received $13,440 in salary and meeting per diems ranging from $1,670 to $3,320.
Council members are also compensated for expenses.
Although he noted money is “really not going to be your motivation for being here,” Martin said potential candidates do factor in compensation when deciding if they will run for office.
“I know in the report it quotes something about that not all Canadians have the same benefit or something like that …
“I would say I agree if there was something like a hundred thousand dollar salary attached to it or something, but when we’re talking, what are we at 13 or 14 thousand, somewhere in there, I don’t understand it.
Martin stated, “I think the easy thing to do is to just simply raise the remuneration. That’s easy just like raising fees, raising taxes, that’s always your easiest step.”
However, he asked, “Is there a way we could … kind of get the best of both worlds so that were minimizing the effects on the taxpayer …
“Would there be opportunities to potentially mitigate the tax ramifications with say our own policies and procedures that council operates under or would there be other opportunities besides just simply raising the level of remuneration?”
Krueger replied, “I’m just not sure exactly what you mean by that question.
“But from the individual councillor perspective, that comes back to do we want to look at the overall remuneration of council, whether that be in the form of salary or some other types of benefits or allocations if you will – so that’s where, if you would like to explore that sort of thing, that’s where that part of the resolution comes into play,” she added.
Aside from Martin’s comments, there was no other discussion on the report and no direction was provided to staff.
Interim CAO Murray Clarke later told the Advertiser he expects a report on the issue in the new year.
