Lacombe County reluctantly agrees to oilpatch tax break

County councillors question wisdom of singling out companies for special tax treatment

Rural municipalities should not be expected to bail out oilpatch companies with tax breaks, said Lacombe County councillors on Thursday.

“I see it as a downloading. Sorry, I really do,” said Coun. Brenda Knight to Lacombe-Ponoka MLA Ron Orr, who was at council to hear concerns about provincial issues.

The province has called on municipalities to write off 35 per cent of the municipal taxes paid by shallow gas companies in a bid to improve the industry’s finances.

This year, municipalities will be compensated for the tax losses, but no commitment has been made for future years.

Lacombe County estimates it will lose about $316,000 in taxes each year if the tax break continues.

Rural municipalities have not taken kindly to the initiative, which they feel unfairly expects them to bail out one small part of an industry, while putting municipalities in the awkward position of treating some companies differently than others.

“This has been a bitter pill for me, to be honest with you,” said Knight.

“Every time someone is forgiven taxes, somebody else pays.”

Orr said the tax measure is one part of a provincial strategy to create a better economic environment for Alberta’s energy industry.

A war room to counter environmental groups’ anti-oil propaganda, efforts to improve relations with Indigenous people and a focus on getting natural gas to markets are other pieces of the strategy.

Reeve Paula Law said municipalities are being expected to forgive a portion of taxes with no guarantee the remaining 65 per cent will be paid.

Many rural municipalities have millions in unpaid oil and gas taxes on their books. A Rural Municipalities of Alberta survey estimated $81 million is owed to counties and municipal districts.

Law said other oil and gas players that are not eligible for the tax break are not happy that some companies are being singled out for special help.

Municipal councils have also questioned how voluntary the province’s request to waive the taxes really is, and there are fears there could be a price to be paid for those that don’t.

Coun. Barb Shepherd said that kind of uncertainty puts council in a difficult spot.

“Do we want to be in the position where we don’t know what the future consequences are?”

Council voted 5-2 to approve the tax break. Law and Knight voted against.

Lacombe County manager Tim Timmons said municipalities are still in the dark about what the province plans to do with resource industry taxes in future years, which makes it difficult to create their required three-year budgets.



pcowley@reddeeradvocate.com

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