Another central Alberta municipal leader has voiced their frustration with unpaid oil and gas taxes, which the minister of municipal affairs called “unacceptable.”
Rural Municipalities of Alberta released a survey of its 69 member municipalities on Tuesday that showed energy industry companies owed municipalities $268 million in outstanding taxes in 2022. That’s up from $253 million the previous year and comes despite surging world oil prices that have boosted industry profits.
“What the survey results confirm are very disappointing to say the least,” said Lacombe County Reeve Barb Shepherd in an email.
“We had 100 per cent participation from rural municipalities (in the survey), so the information is accurate and tells us that the problem is not going away. In fact, there has been a 6.1 per cent increase in unpaid taxes year over year when cash flows were higher than in the past several years.”
“I think it is important to point out that not all companies are complicit, but those that are are causing problems for municipalities and rural citizens,” she says.
Oil and gas companies owed the county $1.8 million last year, up from $1.3 million in 2021.
Shepherd pointed out that many of the companies not paying their municipal tax bills are also short-changing landowners when it comes time to renew surface leases, which allow companies to operate on someone’s property. Some companies are slashing their lease payments to two-thirds or three-quarters of the previous amount, she says.
“Landowners/leaseholders are unwilling to invest the time and energy required to fight back so the underhanded tactic is working.”
Shepherd also said at a time when the industry is booming, unpaid taxes are increasing and 41 per cent of the unpaid taxes are owed by operating companies.
“The oil and gas resources belong to the citizens of the Province of Alberta, so why are these corporations, some from outside the country, allowed to continue to ignore their responsibilities with no consequences?
“If this behaviour is allowed to continue it will impact the level of service and sustainability of some rural municipalities.”
Red Deer County Mayor Jim Wood also said on Tuesday that the existing situation is unacceptable and called on the government to give municipalities more powers to force companies to pay up.
“Really there should be no reason there is any oil and gas company that is operating that is not paying their municipal taxes or their obligations to farmers whose land they are on,” said Wood. Red Deer County is owed nearly $8 million in unpaid taxes.
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$268 million owed in unpaid taxes
Municipal Affairs Minister Rebecca Shulz responded to the RMA survey by saying the government agrees that the problem is unacceptable.
“We are consulting with industry, municipalities, and landowners as we actively explore options to ensure taxes and are paid as a condition of license transfer,” said Schulz in a statement.
The government has given the Alberta Energy Regulator more teeth so it can consider a company’s property tax and lease payment history when determining if it is eligible to hold a licence.
There has been some progress in chasing after companies owing taxes. Twenty-five companies owing $48 million have enrolled in municipal payment plans to settle their bills, she said.
“The vast majority of companies operating in Alberta’s energy sector pay their local property taxes but some have not, leaving municipalities with hard decisions about raising taxes for other taxpayers or cutting services. We will be in contact directly with delinquent companies, reminding them of their tax responsibilities.”
Opposition NDP energy critic Kathleen Ganley criticized the premier for doing nothing to fix the problem, saying a proposed royalty tax break meant to encourage more well cleanup will “encourage more bad behaviour.”
According to the provincial government, the Liability Management Incentive Program would issue $100 million in credits that qualified companies could use to apply against royalties earned from new production. Critics of the proposed initiative said it violates the polluter-pay principle that requires companies to clean up after themselves.