City councillors’ tax break takes a big hit thanks to federal budget
Edmonton city councillors will lose a significant tax break after it was axed in the federal budget Wednesday.
One-third of their income is taxfree. As of 2019, “non-accountable expense allowances” will become part of taxable income.
Coun. Andrew Knack said the decision is overdue.
“Part of it is just clarity,” he said Thursday. “It’s simpler to say, ‘Here’s our salary, here are our benefits and they’re fully taxable.’ “
In January, councillor salaries were rolled back to $98,362 from $100,873 last year. The existing tax break boosts that income, making salaries equivalent to $116,729 in the private sector. Mayor Don Iveson earns $173,269 per year, compared to $177,695 in 2016. With the tax exemption, his salary is comparable to $218,000 in the private sector.
A 2013 report from the independent council compensation committee recommended eliminating the tax exemption for Edmonton councillors, citing “transparency, fairness, direct comparison and ease of (understanding).”
Knack said a new arm’s-length committee will likely re-examine councillor salaries to determine whether to make up for the lost income.
“We don’t want to assume what was recommended ... years ago is still valid today,” he said.
Coun. Ed Gibbons stressed the decision was out of council’s hands: “(The federal and provincial governments) are higher in the pecking order … they can do what they want.
“When we do pick another committee … we can’t go anywhere near it,” he added, noting that independent reviews in the past have compared earnings to similar-sized cities. Calgary eliminated the tax break in 2006.
Iveson spoke about the issue from Ottawa, where he was heading the Big City Mayors’ caucus of the Federation of Canadian Municipalities. He said he’s not sure when an arm’s-length compensation committee will be established.
“If we did the same as Calgary, then the unfortunate consequence is a couple of hundred thousand more in taxes that are collected from members of council and flowed through to Ottawa and the provinces.” he said in an interview Wednesday.
Knack added there’s no way for councillors to be unbiased in salary discussions, which is why compensation is determined independently.
“The great thing about the process is it doesn’t matter what I think,” he said. “It shouldn’t be up to us.”