A federal change to the tax-free status of part of municipal council members’ pay could lead to a pay hike for Kelowna’s mayor and city councillors. —Image: Capital News file

City of Kelowna to consider council pay hike to offset loss of tax-free allowance

Move could see mayor get and $11,830 pay hike and councillors a $3,050 increase

City of Kelowna staff are recommending the city’s next mayor and eight councillors, to be elected in October, get raises because the federal government is eliminating the current tax-free expense allowance they enjoy as part of their pay.

The tax-free amount accounts for about one-third of a council members annual remuneration.

In a report to go to council Monday, city staff are proposing the mayor’s pay be increased by $11,830 per year and each councillor get an additoanl $3,050 per year. The increases would start Jan. 1, 2019.

The extra money would offset the impact of additional taxes and deductions council members will have to pay as a result of Ottawa eliminating the tax-free allowance for elected local government officials.

Currently, Mayor Colin Basran receives $95,695 per year, while each of his councillors gets $33,493 per year.

The Kelowna municipal council salaries are lower than the provincial averages, which are $101,158 for mayors and $39,081 for councillors. (The average does not reflect any increase due to the elimination of the one-third allowance by the federal government.)

In addition to costing the mayor and councillors more, city staff say Ottawa’s move will also increase the amount the City of Kelonwa has to pay as its portion of source deductions for each council member.

Currently the federal government allows elected officials to receive the “non-accountable expense allowance” which permits them to receive one-third of their salary tax-free. The allowance was intended to enable elected municipal officials to cover incidental expenses associated with their elected duties without submitting receipts.

The 2017 federal budget removed the allowance, effective Jan. 1, 2019.

The city says the net affect will be a pay cut for the mayor and councillors and an increase in city-paid source deductions. That is why the increase is being proposed, says the report.

Council will discuss the pay hike proposal on Monday at it regular weekly meeting.

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