Oil taxes: Rural communities claim $173 million owed in unpaid property taxes

Al Kemmere, president of the RMA speaking at the Rural Municipalities of Alberta at the Shaw Conference Centre on November 20, 2018 in Edmonton. Shaughn Butts / Postmedia Shaughn Butts / Postmedia

Unpaid property taxes from oil and gas companies has spiked by 114 per cent within the last year, claims the group representing rural counties and municipal districts.

Roughly $173 million in property taxes is currently owed to rural municipalities from oil and gas companies, the Rural Municipalities of Alberta (RMA) determined in a survey of its members.

That’s a $92-million increase from last March when a similar survey found municipalities were at an $81-million loss from unpaid property taxes.

The spike in unpaid dues has the RMA calling on the province to help them recoup the money.

“Many oil and gas companies are unable or unwilling to pay municipal property taxes due to the ongoing downturn in the price of oil and Alberta’s challenges in market access and receiving a fair price for its resources,” said a Monday RMA news release. “Rural municipalities also have little recourse to recover unpaid taxes from companies that have declared bankruptcy, as municipalities rank below the Alberta Energy Regulator in priority for seizing the assets of a bankrupt company.”

RMA president Al Kemmere said the association has concerns with how the province collects taxes and the recent tax supports offered to gas companies.

“Rural municipalities are proud of their role as partners and supporters of Alberta’s oil and gas industry. However, municipalities require property taxes to provide the infrastructure and services that industry relies on to access natural resources. 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,” Kemmere said in the news release.

The UCP government introduced a gas tax relief initiative in July 2019 to support struggling shallow gas companies by allowing municipalities to provide a 35 per cent reduction on property tax bills, which would then be reimbursed by the province.

But the RMA said municipalities aren’t expecting to receive the top-up from the province in 2020 and must absorb the reduction if they choose to offer the tax credit. The survey found that some municipalities offering the tax relief attribute up to 98 per cent of their unpaid taxes to the shallow gas industry.

“The assessment and taxation model for shallow gas infrastructure is not the cause of or solution of the industry’s challenges,” Kemmere said. “Until government and industry are successful in making fundamental changes rather than blaming long-term, fixed costs such as municipal taxes for the industry’s struggles, this uncertainty will continue.”

More to come.