Ponoka County Reeve Paul McLauchlin expressed optimism the Alberta government is serious about making energy industry companies dodging their municipal tax bills pay up.
“I’m confident that this government, working with landowners and working with the industry folks, is going to solve this problem,” said McLauchlin, who is president of Rural Municipalities of Alberta.
“I think we’ve realized that with this commodity price this should not continue.”
Arc Energy Research Institute, which models the western Canadian sedimentary basin, estimates the energy industry will generate $150 billion in after-tax cash flow this year.
McLauchlin said municipalities are looking for a long-term solution. RMA members surveyed in February reported $253 million in unpaid energy taxes on their books.
Central Alberta municipalities have written off millions after giving up hope they will ever see the taxes owed. Last month, Red Deer County had to write off nearly $1 million, on top of other write-offs in previous years.
“We want to ensure we fix it, not just for now, but for the future,” said McLauchlin, who appeared at a Wednesday news conference on rural economic growth initiatives led by Agriculture Minister Nate Horner and Jobs, Economy and Northern Development Minister Brian Jean.
“The stark reality is that we have other industries that are similar, including the renewable industry, so we need to put the tools in place to ensure that unpaid taxes both surface leases as well as oil and gas taxes are addressed.
“I’m confident that this government is going to move forward on that. I think we’re not going to be talking about this a year from now, to be quite honest.”
So far, renewable energy companies, such as those leasing land to build solar farms around the province, have not shown the same reluctance to pay their tax bills, he said.
“But the fundamental realities of the industry is that it’s a surface rights lease, it’s based on agreements, and we need to put tools in place to ensure that renewables don’t fall down the same path we’ve seen with the non-renewable industry.”
McLauchlin was asked why he was so confident that changes wll be made.
“What I know is status quo, I don’t think that is an answer. We have a healthy industry. We are all in support of the industry. This needs to be solved.
“It’s a small number of people who are taking advantage of loopoles. Loopholes can be filed. This government can fill loopholes and this will no longer be on the radar.
“We’re done with this topic and we need to fix it and we will fix it in the new year.”
Horner said the issue had been on the government’s radar for quite a while, adding Energy Minister Peter Guthrie and Municipal Affairs Minister Rebecca Schulz have been in on discussions to find solutions.
The government is looking at what can be done through the Alberta Energy Regulator to pressure energy companies to honour their obligations to municipalities and individual landowners. Changes could be made to the AER’s data collection, personnel and mandate to pursue tax avoiders.
Municipalities will need to be part of the effort, he said. “I think it’s going to have to be collaborative approach to outline where these taxes are not being paid and then actually validating those circumstances.
“The AER isn’t the only thing being looked at.”
Horner said it is a small number of companies causing the problems.
“The companies who are able to pay their taxes are, except for a few players who are maybe giving the whole industry a bad name, which the industry doesn’t like either.”
For property owners not getting their promised lease cheques, Horner urged them to take their complaints to the Property Rights Tribunal.