I previously wrote all about Edmonton City Council compensation here.

In the 2017 federal budget, there was an unexpected inclusion on page 208 (pdf).

Edmonton City Council currently receives 1/3 of their salary tax-free, and the Federal government is now ending that benefit.

Remove the tax exemptions for non-accountable expense allowances paid to members of provincial and territorial legislative assemblies and to certain municipal office-holders. This exemption is only available to certain provincial, territorial and municipal office holders, and provides an advantage that other Canadians do not enjoy.

As a reminder, Council's salary is set by an independent committee, and in 2013 they gave recommendations about how councillors should be paid. One of their recommendations was that council's salary should be fully taxable. This was the only recommendation from the independent committee that city council decided not to enact. I guess their hand is forced now ¯\(ツ)/¯.

Mayor Councillor
Salary $173,269 (-$44,931) $98,362 (-$18,367)
RRSP Contribution $19,059.59 $10,819.82
Vehicle Allowance $14,457.36 (-$3,814.80) $7,216.20 (-$1,388.64)
Transition Allowance $9,996.28 $5674.73
Total $216,782.23 (-$48,745.80) $122,072.75 (-$19,755.64)

(Note: These salary numbers are based on the already reduced council salaries for 2017)

The justification for this 1/3 tax exemption for politicians was initially to cover out-of-pocket expenses that a councillor might pay to work with his or her constituents and office. This has long since been covered by expense accounts, however, so the tax free portion was simply a salary-bump-by-another-name.

What will be interesting is the City's response to this decrease: will council move to increase their salaries by a commensurate amount, or will they effectively have their pay reduced due to this new federal budget. For now, we can only wait and see.

Update: This change won't take effect until 2019