For the upcoming fiscal year MLAs will be receiving 5.23 per cent more than they received last year. This is in addition to the 3.17 per cent raise they got last year and the 1.36 per cent they got the year before.

Should taxpayers be outraged at these pay-raises Probably not. But don't worry, they still have reason to be upset.

These pay-raises are based on annual change in the Average Weekly Earnings of Albertans as calculated by Statistics Canada. In fact, this is the process the Legislative Assembly has used since 1999 after taxpayers were rightfully outraged when MLAs arbitrarily decided to raise their pay by 5 per cent.

Not only does using an independent third-party number for pay adjustments remove the conflict of politicians setting their own pay, it is completely transparent. Further, it reflects the economic realities of the citizens of Alberta by linking MLA wage increases to that of the people they serve.

Similar processes are followed at other levels of government as well. Our federal MPs adjust their pay to an average of settlements for large bargaining units from across Canada, the city councils in Edmonton and Calgary also use the Average Weekly Earnings of Albertans, and other municipalities link their pay adjustments to the inflation rate. Regardless, all of these mechanisms are independent and completely transparent.

Unfortunately, the same cannot be said for the compensation structure itself.

In addition to their base salaries, many Alberta politicians receive a tax-free allowance, car allowance, retirement allowance and other various payments. This plethora of payments cloud true compensation levels.

This does not only include MLAs, but many municipal politicians from the largest cities to the smallest towns receive a smorgasbord of perks, payments and allowances. Most prevalent would be the provision allowing provincial and municipal elected officials to exempt up to one-third of their salaries from federal and provincial taxes.

Fundamentally, elected officials should be subject to the same tax laws as the people they govern. Most had no problem linking their annual wage increases to that of the people they govern, why not follow suit with the structure of their salary as well

The various allowances and tax-free portions of the salary also make it very difficult for the average citizen to understand how much their elected officials are being paid. Is it enough Is it too much Without transparency it's impossible for most Albertans to make a reasonable judgement.

Currently, MLAs receive one-third of their $71,224 salary tax-free. However, if made completely taxable, it would actually be $83,121. This doesn't include their $9,000 RRSP allowance, car reimbursement, or any pay for committee work.

Many municipal politicians across Alberta receive same. Edmonton city councillors also receive one-third of their salaries tax-free, a partially tax-free car allowance, a partially tax-free retirement contribution, and a partially tax-free deputy mayor allowance. While they advertise their salaries to be $63,638, a fully-taxable equivalent is equal to $85,110.

This process should stop. All salaries should be converted into their fully-taxable equivalent as has been done across Canada. MPs eliminated their tax-free portion a few years ago. Ontario, BC, Manitoba, and Nova Scotia also have eliminated any tax-free money for their politicians. It's now time for Alberta to follow suit.

By: Scott Hennig
Posted: April 06, 2006
Topic: Alberta

Contact the regional director Scott Hennig for further information.

Type: Commentary

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