Close X
Friday, November 1, 2024
ADVT 
National

Tax Revolt? Taxes Energy Companies Owe Alberta Municipalities More Than Double

The Canadian Press, 21 Jan, 2020 10:36 PM

    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.

     

    "Oilpatch property taxes are now voluntary," suggested Regan Boychuk, a researcher with the Alberta Liabilities Disclosure Project, which works to understand the impact of old energy infrastructure.

     

    McLauchlin, also an oilpatch consultant, said about 40 per cent of unpaid taxes are from severely distressed companies in an industry hard and widely hit by lower resource prices. The rest of the shortfall is from companies that continue to operate but don't pay.

     

    "My personal opinion is that this is a tax revolt," McLauchlin said. "They are using this as a lever to decrease their assessment and change those costs."

     

    Some of that has already occurred. Last year, Alberta's United Conservative government implemented legislation allowing municipalities to cut taxes on certain kinds of wells by up to about one-third.

     

    The province initially reimbursed municipalities for the cuts. But the municipalities say that program has ended and they've been left to absorb the loss.

     

    Boychuk said mill rates on wells and other facilities haven't changed in years. Oil and gas reserves, however, have declined.

     

    "What industry is really saying is that they've depleted their wells so far they can't cover operating costs. The wells are done and whatever wealth remains needs to be directed to cleanup rather than looted any further before bankruptcy."

     

    The number of wells under care of the Orphan Well Association, an industry-funded group that cleans up abandoned wells, stands at 3,400 — an increase of 300 since last January.

     

    MORE National ARTICLES

    Arrest Made And Man Charged In Connection To Homicide Of Jagvir Malhi And Randeep Kang

    Tyrel Hieu Nguyen Quesnelle Was Arrested Friday And Charged With First Degree Murder.

    Arrest Made And Man Charged In Connection To Homicide Of Jagvir Malhi And Randeep Kang

    Three Firearms Seized Following Traffic Stop In Surrey

    Three firearms have been seized and a man has been arrested following a traffic stop by the Surrey RCMP, in the Cloverdale area.    

    Three Firearms Seized Following Traffic Stop In Surrey

    Community Generosity Demonstrated In Full Force For 2019 In Surrey

    Community Generosity Demonstrated In Full Force For 2019 In Surrey
    Thanks to the generosity of the community, RCMP officers, staff and volunteers, the 2019 Keian’s Holiday Wish Toy Drive and Pack the Police Car charitable campaigns have been a resounding success.

    Community Generosity Demonstrated In Full Force For 2019 In Surrey

    To All Those Celebrating, I Wish You A Safe And Happy Holiday: Premier John Horgan Sends Christmas Wishes

    Premier John Horgan has issued the following statement marking Christmas Day:

    To All Those Celebrating, I Wish You A Safe And Happy Holiday: Premier John Horgan Sends Christmas Wishes

    Police Investigate Two Armed Robberies In Abbotsford, B.C.

    Police Investigate Two Armed Robberies In Abbotsford, B.C.
    Police say the first robbery on Monday night happened at a liquor store, followed by the second robbery at a gas station along the Fraser Highway.    

    Police Investigate Two Armed Robberies In Abbotsford, B.C.

    RCMP Look For Driver In Burnaby, B.C., Hit And Run That Left Teen Hurt

    RCMP Look For Driver In Burnaby, B.C., Hit And Run That Left Teen Hurt
    Police say they received a report Monday at 5:25 p.m. that a vehicle had struck a boy in an intersection of a residential area of the city and the driver didn't stay at the scene.    

    RCMP Look For Driver In Burnaby, B.C., Hit And Run That Left Teen Hurt