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Red Deer County mayor against oil industry royalty breaks

Government should focus on giving municipalities power to collect unpaid energy industry taxes

Red Deer County is owed just under $8 million in oil and gas taxes and Mayor Jim Wood does not see why royalty breaks are being considered by the province.

“The RStar program, in my opinion, is giving money to oil companies to do what they should have done anyway,” said Wood on Tuesday, shortly after council reviewed a budget update that showed the county has $9.5 million in outstanding 2022 taxes, $7.9 million of it mostly related to the energy industry.

The UCP government is moving ahead with the Liability Management Incentive Program (formerly known as RStar), which would issue up to $100 million in credits that eligible companies could use to apply against royalties earned from new production.

Wood said he understands using contributions to the Orphan Well Program to clean up energy industry sites on behalf of bankrupt companies.

“But for the Province of Alberta, to take the taxpayers of this province’s money to give to oil companies to boost the profits of the shareholders of those companies to do something they were required to anyway, I do not understand the reasoning for this.

“I believe if the Province of Alberta wants to do a make-work project maybe they should take a look at other means of doing so,” he said, adding county council has not met to take a formal position on the government’s incentive program.

There are plenty of roads, schools and hospitals that if funded to an “adequate standard” would generate job-creating infrastructure projects, he added.

A better use of government energy would be giving municipalities more power to recoup the millions they are owed in unpaid oil and gas taxes.

Rural Municipalities of Alberta polled its members last year and found $253 million in oil and gas taxes were outstanding. Members have been polled again and a new tally is expected out soon.

“Not being able to collect taxes from the oil and gas industry impacts Red Deer County’s financial position. There is no doubt about it.

“The frustrating part of this is we do not have enough tools given to us from the Province of Alberta to be in fact at the top of the list when someone is bankrupt.”

Wood questions why municipalities are not at the front of the line for unpaid liabilities when a bankrupt company’s assets are disposed of.

He also does not know why solvent companies that have not met their obligations to municipalities are allowed to continue operating.

“That is frustrating for us. That is one thing that needs to be changed for sure.”

Lacombe County Reeve Barb Shepherd also recently questioned why further tax breaks were being considered for the energy industry.

“I think that it is important to remember that the rural municipalities of this province have already ‘subsidized’ the industry with a provincial government-mandated property tax holiday,” said Shepherd last week. “We have not yet seen the end of the tax holiday so let’s not forget that is still in place.

“It is my belief that if the province moves ahead with the Liability Management Incentive Program they must reinstate the municipalities’ ability to collect the requisite taxes that they have foregone for the past few years.”

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Paul Cowley

About the Author: Paul Cowley

Paul grew up in Brampton, Ont. and began his journalism career in 1990 at the Alaska Highway News in Fort. St. John, B.C.
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