The amount of unpaid property taxes that oil and gas companies owe Alberta rural municipalities has more than doubled over the last year, a trend some are calling a tax revolt.
Rural Municipalities Alberta said Monday that a survey of its members shows that they are owed a total of $173 million — a 114-per-cent increase since a similar survey was done last spring.
“If Alberta’s property tax system is not amended to prevent oil and gas companies from refusing to pay property taxes, many rural municipalities will struggle to remain viable,” association president Al Kemmere said in a release.
Kemmere explained that municipalities want the province to change the rules so they can force companies to make good on tax debts. Property taxes on energy facilities are controlled by the province, not the local community.
“A lot of the oil and gas is doing their fair part as citizens, but we need legislation to force others to pay much like everybody else has to pay,” said Kemmere.
In Ponoka County, south of Edmonton, Reeve Paul McLauchlin estimates his municipality is owed about $2.6 million out of a total municipal budget of $27 million.
“It creates operational constraints, our ability to provide community services. We have non-profits asking for assistance. We say ‘no’ more and more.”
Industry says the way taxes are assessed is driving companies out of business. Properties are assessed by the provincial government, which evaluates them on replacement cost and not on market value, said Ben Brunnen, vice-president of the Canadian Association of Petroleum Producers.
“We defend the need for the province to take a look at how assessment works and have it reflective of the market,” he said.
“A lot of these unpaid taxes are coming in jurisdictions where you’ve got assets that are older and not as productive or economic. The choice for these types of assets is to shut (them) in or find a way to reduce costs.”
Those shut-in wells often end up abandoned and unreclaimed after a bankruptcy, said Brunnen, who suggested some municipalities are going to have to accept less oil and gas revenue.
The Alberta Court of Appeal ruled last year that municipalities are unsecured creditors, which puts them at the back of the line for tax debt collection after a bankruptcy.
Bob Weber, The Canadian Press