Red Deer County is writing off another $1.4 million in unpaid oil and gas taxes. (Advocate file photo)

Red Deer County is writing off another $1.4 million in unpaid oil and gas taxes. (Advocate file photo)

Red Deer County writes off $1.4 million in unpaid energy company taxes

Writing off taxes allows county to get $235,000 in provincial tax credits

Red Deer County council has agreed to write off another $1.4 million in unpaid oil and gas taxes.

Council had to write off the bad debt to receive $235,178 in provincial tax credits under a pair of programs designed to ease some of the financial stress municipalities have been facing because of the economic downturn triggered by low world oil prices in past years. The program gives municipalities credit for the education taxes owed and a type of industrial taxes paid by energy companies.

Rural Municipalities of Alberta estimated last year about $245 million is owed to rural municipalities by oil and gas companies — about half of which are still operating.

In response, the provincial government introduced legislation last October to give municipalities more power to pressure oil and gas companies to pay off their tax debts.

The Restoring Tax Accountability Amendment Act, which has not yet passed, would allow municipalities to place a special lien on both owners and operators of oil and gas companies that owe taxes.

Companies in arrears would have 120 days to pay up, or strike a payback deal with the municipality, before the municipality can seize any of their property within its borders.

Should a company become bankrupt, the legislation bumps municipalities higher up the list of creditors to be paid out.

Red Deer County has also taken its own steps to try to recoup about $6 million in unpaid taxes by energy industry companies.

A tax payment plan was rolled out in November 2020 to give energy industry companies more time to pay outstanding taxes. Firms will be given 12 to 18 months to work out a plan to pay their back taxes. Other than the taxes, their accounts must be in good standing.

To encourage companies to pay off their debts, a 16.9 per cent interest charge will be applied as usual. When companies have paid off their taxes, the interest rate will drop to six per cent retroactively.

Mayor Jim Wood estimated last year that the program had allowed the county to recoup about $5 million in unpaid taxes.

On Tuesday, Wood said while “it’s never nice to make a motion to write off a debt” the provincial program was welcome.

Wood said he would like to have council meet with staff to look at extending the one-time program.

“I would look forward to a conversation of the status of collections and options.”

County corporate services director Heather Surkan said five companies took the county up on its tax payment plan offer and two other applications are under review.

“That was a very good program and it was successful,” she said.

Oil and gas company representatives seeking a tax break have been regular visitors at many central Alberta county council meetings.

In Lacombe County on Thursday, a company with oil and gas properties in the municipality that has not paid its property taxes since 2018 and owes $120,000 will be asking for relief from $45,000 in tax penalties and to be allowed to negotiate a payment plan to cover the rest.

Staff recommendation is to turn down the request as it has in every other similar case.

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