The Rural Municipalities of Alberta is calling on the province to take steps to level the playing field to allow municipalities to recover millions in unpaid taxes owed by oil and gas companies.
According to a recent survey of RMA members, $245 million in property taxes currently owed to rural municipalities by oil and gas companies has gone unpaid.
All 69 members responded to the survey and results showed a 42 per cent increase in unpaid tax amounts compared to 2020, and a 203 per cent increase from 2019.
“In some municipalities, unpaid tax amounts are so high that service levels are being reduced, municipal staff are being laid off, and serious discussions are occurring about whether the municipalities can continue to function,” said RMA president Paul McLauchlin.
“The fact that every rural municipality in the province took the time to complete this survey speaks to the anxiety and frustration that rural leaders are facing on this unpaid tax issue.”
The association said members manage over 70 per cent of Alberta’s roads and 60 per cent of bridges, and the revenue needed to manage this critical transportation network is almost entirely derived from property taxes. Non-payment threatens the ability of municipalities to provide the core infrastructure and services that the oil and gas industry also relies on to access natural resources.
It said a legislative loophole for the oil and gas industry does not allow municipalities to place special liens, or use other tax recovery tools on linear property, which has made recovering unpaid taxes from both operational and non-operational companies extremely difficult.
The survey showed about 57 per cent of unpaid taxes are the responsibilities of companies that continue to operate.
“As a homeowner, I am responsible for paying my property taxes or face stiff penalties. Small business owners across the province are expected to pay property taxes regardless of the profitability of their business. There is no reason why oil and gas companies should have an option to pay property taxes and face no consequences if they choose not to,” McLauchlin said.
He said nonpayment is disrespectful to every other homeowner and small business in the municipality who will see their taxes increase, or their service levels decrease, due to the irresponsibility of some oil and gas companies.
The RMA said the province could amend the Municipal Government Act to clearly state that municipalities may use tax recovery powers available for other property types to address non-payment oil and gas property taxes.
Another solution would be to amend the process through which the Alberta Energy Regulator approves the acquisition and transfer of energy licences and approvals by considering whether the acquiring company has outstanding municipal property taxes.
The province could also let municipalities off the hook for providing education property tax funds to the province on properties for which taxes are uncollectible.
“We appreciate that this is a complex issue, and that the province needs to thoroughly evaluate the options available. However, action is needed now. RMA and its members are willing to work with the province and the oil and gas industry to develop tools and incentives to lessen the property tax burden on industry during these difficult economic times,” McLauchlin said.