Federal tax change could lower Council pay

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by Colin Smith

Morinville councillors are facing a potential drop in take-home pay resulting from a federal tax policy change.

One-third of the pay that the mayor and councillors receive in the form of honorariums has been exempt from taxation. This portion has been considered an allowance in lieu of council members’ incidental expenses, one that they don’t have to account for.

But changes coming out of the 2017 federal budget mean that the non-accountable allowances must be included as taxable income starting in January.

Council is now considering whether earnings should be adjusted to ensure the tax payments don’t result in lower take-home pay.

In connection with the 2019 budget planning process Council directed the Administration to find out how other municipalities are handling the tax change. Information received from 14 municipalities in the region indicated that four, including Edmonton and St. Albert, had decided to increase councillors’ pay to make up for it, four had decided not to make an adjustment (at least at present), and six had not decided how to deal with it, among them Sturgeon County.

Currently, Morinville’s mayor earns an annual honorarium of $42,000 and councillors receive $21,000, with one-third of the money being tax-free.

Council honorariums increase each January in line with a cost of living allowance (COLA).

According to Morinville’s Council Remuneration Policy an honorarium rate review is to be conducted by an outside party at the midpoint of the council term, which would put the next one in October 2019.

Federal and provincial elected officials were also formerly eligible for tax exemptions on non-accountable allowances but stopped receiving them in 2000 and 2016 respectively.

The topic was scheduled for the Sept. 18 Committee of the Whole meeting but was deferred to the Oct. 9 regular Council meeting.

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