Alberta’s municipal affairs minister has come up with a plan to support the energy industry without taking away substantial tax revenue from rural municipalities.
Tracy Allard said Monday she ditched a previous proposal that would have drastically decreased industrial taxation to rural communities.
After consulting with many counties across the province, Allard found it was not sustainable to have some of these rural municipalities face revenue drops of up to 20 per cent.
Instead of giving oil and gas companies an across-the-board break on paying property taxes in order to boost exploration, and ultimately jobs, Allard announced another plan that she said would create only a three per cent, or $7 million, revenue reduction.
Under Allard’s new proposal, industries will get a “tax holiday” for three years when drilling new wells and building new pipelines. The government will also eliminate the well-drilling equipment tax provincewide for new drills.
As well, there will be lower assessments for less productive oil and gas wells and a continuation of the recently introduced 35 per cent assessment reduction on shallow gas wells for three years.
Allard said these measures will provide much-needed certainty to industry, investors, municipalities and other taxpayers.
The government, meanwhile, has three years to come up with a longer-term plan that will help the energy industry without creating undue hardship for municipalities.
“Alberta needs to be as competitive as possible to attract investment into our communities,” added the minister.
“We know our municipal partners are committed to do their part to create jobs and support Albertans through this challenging economic time.”
While some municipalities have complained of experiencing funding reductions while more responsibilities are downloaded on their shoulders, Allard said the state of the provincial economy is everybody’s business.
“We all face these challenges. Every elected leader today has to do more with less…”
Paula Law, reeve of Lacombe County, said this new plan is much more palatable, as the old one would have resulted in at least a $2-million revenue loss for her municipality.
She’s pleased the minister has consulted with municipalities, and looks forward to being part of a long-term solution “that works for everybody” — boosting Alberta’s oil and gas industries, while keeping rural municipalities sustainable.
Al Kemmere, president of Rural Municipalities of Alberta, said counties and municipal districts can live with the new plan.
It “reflects an effort to achieve a fair balance between enhancing oil and gas industry competitiveness and supporting municipal viability.”
Kemmere appreciates Allard’s efforts to understand how important the current tax assessment model is to supporting infrastructure and operations.
Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers, is also pleased with this three-year solution, saying the Alberta government’s action “to incent new drilling and provide relief to mature wells is a crucial step to help restore investor confidence and preserve and create jobs for Albertans.”