Alberta RMs express concern
The Rural Municipalities of Alberta (RMA) have expressed concern that, despite a boom in commodity prices, outstanding taxes on oil and gas properties in Alberta continue to rise. The following is a condensed version of an RMA press release detailing their concerns.
The RMA conducted a member survey identifying that as of December 31, 2021, approximately $253 million in property taxes currently owed to rural municipalities by oil and gas companies have gone unpaid. This represents a 3.3% increase from the unpaid amounts reported for the 2020 tax year, a 46.7% increase from 2019, and a 213.2% increase from 2018.
This growth indicates that some oil and gas companies continue to ignore their tax payment obligations even as Alberta’s economy improves, oil prices skyrocket, and new oil well drills increase substantially. While most oil and gas companies pay taxes on time and in full, the industry and the Government of Alberta have previously made excuses for companies choosing not to pay property taxes, arguing that due to low commodity prices, payment of property taxes would lead to insolvency for such companies and result in lost jobs and negative economic impacts. This was clearly inaccurate, as the industry is now booming, yet property taxes continue to be at the bottom of the to-do list for some companies.
RMA President expressed his concerns. “As the oil and gas industry’s fortunes have improved over the past year, both oil and gas companies and the Government of Alberta have benefitted tremendously. Companies are reporting record profits, and the province has turned a projected large deficit into a budget surplus nearly entirely due to an increase in resource prices and energy industry investment in the province. Meanwhile, rural municipalities, which play a critical role in providing access to oil and gas resources, are left behind, still unable to collect the taxes required to fund core infrastructure and operations. Not only is this unfair to municipalities, but it is also unfair to every rural taxpayer who must pay more or receive fewer services to offset those taxes not being paid by the oil and gas industry.”
McLaughlin continued, saying, “While the province has taken some steps related to this issue, none solve the problem. If the political will was there, this issue could be solved quickly and simply through the Alberta Energy Regulator (AER). If companies want to profit from Alberta’s oil and gas resources, they should be required to pay all property taxes in full and on time. Building this into the industry’s regulatory system would be simple, transparent and effective, but the AER and Alberta Energy seem unwilling to stand up and actually regulate industry during a period of record profits.”
It is also important to consider that not only are rural municipalities dealing with unpaid taxes, but they have also absorbed many other downloads and losses in revenue recently, all based on the need to help the oil and gas industry or the province address fiscal challenges. This includes a three-year property tax holiday on newly drilled wells for the 2022, 2023, and 2024 tax year; the elimination of the Well Drilling Equipment Tax; a 25% reduction in the Municipal Sustainability Initiative grant program in 2021, 2022, and 2023; as well as increased responsibilities (and costs) associated with policing, affordable housing, and other primarily provincial services.
“To say that municipalities have made sacrifices to support the industry and the government is a huge understatement,” McLaughlin concluded.
