Alberta’s rural municipalities say they are encouraged by the provincial government’s plan to take action on unpaid oil and gas property taxes.
On Monday, Energy Minister Pete Guthrie issued an order under the Responsible Energy Development Act requiring the Alberta Energy Regulator to receive evidence that municipal taxes have been paid when approving licence transfers or new licences.
“While most companies pay their taxes regularly and on time, there are a few delinquent companies that owe overdue property taxes. That is why we’re putting in place this ministerial order – to continue building on our recent work. Our goal is to reduce unpaid taxes throughout the province,” Guthrie said in a statement.
Companies will now have to confirm that their unpaid municipal taxes across the province do not exceed the maximum threshold allowed or that they have a repayment agreement in place whenever they apply for new licences or for licence transfers because they’re seeking to sell their assets. The departments of Energy and Municipal Affairs worked together on this directive.
Rural Municipalities of Alberta was pleased with this announcement, said organization president Paul McLauchlin.
“Municipalities are strong partners in responsible energy and resource development,” McLauchlin said in a statement.
RMA represents several rural central Alberta communities, including Red Deer County, Lacombe County, Ponoka County, Mountain View County and Stettler County.
Unpaid oil and gas property taxes have been the RMA’s “top advocacy issue for several years,” McLauchlin added.
A recent RMA member survey showed that rural municipalities collectively face an unpaid property tax burden of $268 million from oil and gas companies, which represents a six per cent increase from last year.
RMA noted this approach will not assist municipalities in recovering taxes owed by companies that are now insolvent, but it will require operating companies to pay municipal taxes to sell or acquire licences. Forty-one per cent of the $268 million currently outstanding is owed by operational companies.
“While this Ministerial Order is a major positive step in holding oil and gas companies accountable for paying municipal property taxes, rural landowners continue to struggle with unpaid surface leases. In many cases, those affected are small family farms or acreages that use surface lease revenue to supplement their agricultural income, or to support their retirement,” explained McLauchlin.
“Unfortunately, the data on the value of unpaid surface leases is not great; we know that this is also a widespread problem, but it is mainly the responsibility of same small group of bad actors that are ignoring their property tax payment obligations. We are thankful for the province’s action on unpaid taxes, but we now plan to shift our focus to better understanding and developing solutions to hold the same companies accountable for making surface lease payments.”
Joe Ceci, Alberta NDP municipal affairs critic, said the impact of unpaid oil and gas property taxes has been “harmful” to many communities.
“For years, the UCP let the issue of unpaid municipal taxes grow and ignored calls from rural municipal leaders and the Alberta NDP to use the power of the AER to withhold licenses from these bad actors,” Ceci said.