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City Council looks at pay increases to make up for tax changes

POWELL RIVER, B.C. – City of Powell River council members are looking at a pay raise, but if approved, their take-home pay will be just dollars and cents more than last year.

In a report to the City’s Committee of the Whole, chief financial officer Adam Langenmaier noted that Council remuneration would increase by $1,850, which would result in a net pay increase of $9.35.

The Mayor’s remuneration would increase by $6,750, which would result in a net pay increase of $7.23.

“What it’s doing is taking their net pay and bringing it back to what it was prior to the federal government’s change on elected officials’ remuneration,” Langenmaier said.

Currently, Mayor Dave Formasa receives $48,500 before tax while councillors get $19,400.

“These increases are the absolute minimum to provide Mayor and Council with net pay similar to the pre-Income Tax Act change amounts,” Langenmaier said. “In the real world, if Mayor and Council are earning other sources of income, the net pay would likely be reduced even though increases have been made to try and offset the tax changes.”

Prior to 2019, changes to the Canadian Income Tax Act pay received by elected officials was subject to a one-third non-taxable allowance.

“So, the federal government changed the tax treatment of elected officials taking effect in 2019,” Langenmaier told the MyPowellRiverNow.com newsroom. “One-third of their remuneration was exempt from income tax and CPP because it was considered an expense allowance that was part of their duties. So that’s no longer eligible. What you have to do is pay income tax on the whole amount.”

In short, one-third of the mayor’s and councillors’ salaries was exempt from income tax.

However, in the 2017 federal budget, the Federal Income Tax was revised to eliminate this allowance, leaving council’s remuneration fully taxable starting this month.

Council will vote on the recommendation at a future meeting.

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