Woolwich takes middle road on removal of tax-free portion of council salaries

WOOLWICH COUNCILLORS WILL GET a small bump in pay starting in their next term to compensate for the elimination of the tax-free portion of their stipend.

Currently, a third of money paid to councillors goes untaxed, but the federal government has axed that provision effective Jan. 1, 2019. Meeting this week, Woolwich council opted for a modest increase in pay that will come into effect after next year’s municipal election.

Based on councillors being paid $17,924 this year, the compensatory move will add $1,498 to base pay, bringing it to $19,422. For the mayor, the base pay of $ 30,554 will go to $33,108.

All told, the changes will cost the township an extra $12,526 in 2019, explained director of finance Richard Petherick.

That’s based on a calculation that uses a modest marginal tax rate as its guide. For councillors with other income that puts them in a higher bracket, the take-home pay is likely to go down, he noted.

Using the highest marginal tax rate, as the City of Kitchener just did in dealing with the same issue, would see expenses jump by $38,027, Petherick noted, adding the township has been keeping an eye on neighbouring municipalities. Wilmot Township, for instance, opted for the same middle ground, while Waterloo is still debating the issue at the committee level.

The middle road didn’t suit either Coun. Patrick Merlihan or Coun. Larry Shantz, but for opposite reasons.

Merlihan argued future candidates might shy away if there is in effect a penalty due to the rule changes, while Shantz suggested there should be no increase at all, with future councillors simply taking the hit.

“I’m fighting to cut back on increases,” he said of his take on spending and taxes, arguing this would set an example.

While agreeing “to some extent” with his Ward 1 colleague Merlihan, Coun. Scott Hahn went with the increase recommended by staff. “It’s a modest increase for what we do.” In voting for the recommended increase, Coun. Mark Bauman said people running for council do so as a public service, so the small difference shouldn’t be an issue, while acknowledging that the federal government is taking away an incentive of sorts, essentially downloading another cost to the municipalities.

The middle-ground approach was approved 4-2 in a split vote.