MOUNTAIN VIEW COUNTY – The divide between oil and gas companies and rural municipalities over assessments and taxes remains unresolved despite a recently announced provincial government plan.
The government recently announced that it was implementing a plan to support the oil and gas industry. The plan comes at the conclusion of a months-long assessment model review.
The government had proposed a reduction in assessment from between seven and 20 per cent; those changes would have cost rural municipalities millions and likely would have forced tax increases. Those proposals are now off the table.
Instead the plan includes an exemption from property taxes for three years when drilling new wells and building new pipelines, as well as the elimination of the well drilling equipment tax.
The province says it will be developing a longer-term review of the regulated assessment system, including the ongoing issue of unpaid taxes, said Municipal Affairs Minister Tracey Allard.
Al Kemmere, former president of the Rural Municipalities of Alberta (RMA), said there are millions of dollars in unpaid taxes owed to municipalities.
“We still have items that we need to address,” said Kemmere. “One of the biggest challenges with this whole process is unpaid taxes. If we don’t fix that in the near future all these modification are going to be for not. I’m hoping we can come up with a solution.”
Unpaid taxes from oil and gas companies have led some RMA member municipalities to be “on the cusp of not being able to pay their bills,” he said.
There is a sector of the industry that has taken the approach of not paying municipal taxes, he said.
“People are asking, how do they get away with that when every other non-residential taxpayer and every residential taxpayer has to pay their taxes?” he said. “That is an ongoing concern. That is one of the items that need to move forward.
“All the other taxpayers within the province have their obligation to pay their taxes and we believe the industry has the same obligation.”
Legislative or regulatory changes are needed to address the unpaid tax issue, he said.
“We understand that industry has had a tough go, but this needs those changes that fill that loophole,” he said.
The current assessment model is supporting municipal infrastructure and operations, he said.
Tim McMillan is the president and CEO of the Canadian Association of Petroleum Producers (CAPP).
“Our industry has looked for some changes in the assessment process,” said McMillan. “We think there are foundational pieces there that need to be fixed or changed for the long-term.
“Municipal taxes and assessments for oil and natural gas are one of the biggest competitive issues facing this province today. These aren’t easy challenges and they have built up over time.”
The four proposed options that were considered for changing the assessment model would address what CAPP believes are needed changes, he said.
“From the oil and gas industry’s perspective, we have seen over time the assessment values that are being used in the assessment we would say aren’t accurate, and the four options that come forward in the assessment review were correcting that and there was a substantive change from what is currently being used,” he said.
“What was decided by the minister is she wants to do more consultation before she moves forward in correcting what has been built up over a long period of time.”
The recently announced goverment plan is an “interim measure as we are working to correct a broader system issue that has built up over time,” he said.
Regarding unpaid taxes, McMillan said, “From an oil and gas perspective, taxes have to be paid. We understand there is a problem and we look forward to working with the RMA to address that problem. It needs to be rectified.”
