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Updated: Rural municipalities owed nearly $268 million in unpaid taxes by oil and gas industry

That is a 6.1 per cent increase from 2021 and a 231.5 per cent increase from the 2018 tax year
Red Deer County Mayor Jim Wood does not believe oil and gas companies need royalty tax breaks. (Advocate file photo)

The Rural Municipalities of Alberta announced Tuesday that its recent member survey shows nearly $268 million owed in taxes by oil and gas companies.

The independent association, which represents Alberta’s 69 rural and municipal districts, said the money owed as of Dec. 31, 2022, is a 6.1 per cent increase from the 2021 tax year and 231 per cent more than 2018.

“Given the success of the industry and the wealth it has generated, I am shocked that I still have to discuss this issue, and that rural municipalities and rural property owners continue to be forced to subsidize an industry in a massive boom period,” said RMA president Paul McLauchlin, in a news release.

“While oil and gas revenues flow to government as royalties or out of the province to shareholders, industry and the provincial government assume rural municipalities can magically maintain service levels even as they face an average shortfall of nearly $4 million due to non-payment of taxes.”

RMA members reported over $53 million in unpaid taxes from the 2022 fiscal year that are currently unpaid. This is a larger amount than from any other fiscal year.

Additionally, operational companies are responsible for 41 per cent of the $268.5 million unpaid tax burden. McLauchlin called on the Alberta Energy Regulator to prohibit any company in arrears on property taxes or surface leases from operating.

Red Deer County Mayor Jim Wood applauds the RMA for continuing to raise the issue, which is clearly not going away.

“An easy observation from this is the situation appears to be getting worse, instead of better,” said Wood.

“We will continue to press the provincial government to make changes to the system so that we can collect these taxes and stop the companies that are actively viable with continuing operations without paying their municipal taxes.”

Wood said municipalities do not have the means to force companies to pay. Red Deer County is owed just under $8 million in unpaid oil and gas taxes. Since 2019, the county has written off $7.8 million in unpaid taxes.

“The long and short of it is the province needs to give municipalities more tools. Really there should be no reason there is any oil and gas company that is operating that is not paying their municipal taxes or their obligations to farmers whose land they are on.

“This is an unacceptable situation.”

McLauchlin said the issue is “nowhere near solved. The Government of Alberta has allowed legislative and regulatory gaps to remain in place and industry continues to take advantage of them, even in good economic times.”

“The fact that many years after this issue arose, 41 per cent of unpaid taxes are from operational companies shows a complete failure on the part of the Alberta Energy Regulator to ensure that the industry operates in the public interest. While rural municipalities try their best to use the limited enforcement tools available to them, there needs to be an effort at the provincial level to hold the industry accountable.

“If property tax payments are ignored, what other environmental or regulatory responsibilities will the province look the other way on next?”

According to the release, RMA members are responsible for over 70 per cent of Alberta’s roads and 60 per cent of Alberta’s bridges. Without this tax revenue, many rural municipalities have had to cut services or raise taxes.

“What some in the industry and government don’t understand is that without rural municipalities, the oil and gas industry would be nowhere near as successful as it is,” McLauchlin said.

“Property taxes are not collected for fun. They pay for the construction and maintenance of roads and bridges for the oil and gas industry to access resources, as well as to provide everything from water to waste collection to recreation and many other services to rural residents, many of whom work in the oil and gas industry. Ignoring property taxes doesn’t just hurt the municipality, it hurts rural communities and places an unfair burden on other rural businesses and residents.”

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