Council members among those that will lose income tax exemptions thanks to federal government actions

KAGAWONG—Billings Township council is opposed to the federal government having made changes that will see councillors, firefighters and others that are paid an honorarium lose an income tax exemption they currently receive (for one-third of what they received) as of 2019.

“You all have a copy of a letter from Cheryl Gallant, MP for Renfrew-Nipissing-Pembroke. What she is saying is that the federal government is trying to take away (remove) the tax-exemption portion of remuneration paid to local councils,” said Billings Mayor Austin Hunt at a council meeting last week. “I’m sure there will be a lot of opposition to this.”

Billings councillor Brian Parker said that the action taken by the government will make it even tougher to entice members of the public to run for municipal councils in the future. “This (tax exemption) was an incentive for some people considering running for councils. It will kill the number of people that will be running for office,” he stated Councillor Parker.

In a letter to council, Ms. Gallant wrote in part, “As you may be aware, the 2017 federal deficit budget raises personal taxes by targeting all municipal politicians, school board trustees, and elected members of municipal utilities boards, commissions, and corporations.”

“On page 208 of the budget the Trudeau Liberals removed the tax exemption portion of remuneration paid to local officials,” wrote Ms. Gallant. “Introduced in 1947 under the federal Income Tax Act, the purpose of the one-third tax-free expense allowances was to provide, “an allowance for expenses incidental to the discharge of the person’s duties as an elected officer.”

“Unlike some elected officials in cities who receive office budgets, car and expense allowances as well as six-digit salaries, this is not the case with most municipal politicians I know, with a majority of our councillors receiving a base salary of less than $20,000,” wrote Ms. Gallant.

Ms. Gallant continued, “as it was described to me by a local mayor, ‘Most municipal council members in rural areas are already very poorly compensated for the work they do in their communities. As mayor, my hourly compensation is well below minimum wage. I make far less than any other municipal staff person working similar hours on behalf of the municipality. It is extremely difficult to attract good candidates into municipal politics now. Removing the 1/3 tax exemption on council remuneration without compensating for that loss will make it nigh on impossible’.”

“It is the expectation of debt-obsessed Ottawa that remuneration will be “grossed-up:” (increasing the salary to offset the increased tax payment) so as not to impact the take-home pay received by a mayor and councillors,” continued Ms. Gallant. “This in turn will boost individual tax bills for elected officials as well as costs to ratepayers, who are already struggling with increasing property taxes.”

She said municipalities will now be forced to divert funds which would be spent on roads, bridges or clean water to reimbursing elected officials. “This, along with the increased borrowing costs associated with the federal government’s infrastructure bank scheme, will place increased pressure to raise property taxes, making home ownership more unaffordable.”

“We receive about $4,000 per year as councillors,” Councillor Parker told the Recorder after the meeting. “What the government is doing is all a bunch of crap. My suggestion is that up to $10,000 paid to councillors should  be tax free and anything over that to be okay to tax. This would sure help a lot of councillors on the island and small communities everywhere.”

Councillor Parker said “with all the government downloads it is harder for municipalities to keep up. We are accountable for water systems, now septic system inspections, and it doesn’t seem the downloading will stop until they break the backs of municipalities.”

“This newest development is just another knife in the chest of municipalities and you will see fewer people run for municipal politics,” continued Councillor Parker. “We have been cut back on funding, and resource and more responsibility is being dropped on municipalities. It is time the little guy starts to be heard in Ottawa and Toronto.”