Oil and gas companies with unpaid property taxes will be forced to pay up.
The Government of Alberta is directing the Alberta Energy Regulator to withhold approval or transfer of industry licences unless proof of tax payment is provided.
This comes after the Rural Municipalities of Alberta (RMA) said members were owed $268 million in municipal taxes by the oil and gas industry. A cumulative $220 million in unpaid taxes was reported by municipalities – with $130 million in tax arrears, and the rest in cancellations.
“Our government is serious about addressing the ongoing problem of unpaid municipal taxes. This problem has lingered for far too long, and while some viable companies have started to pay their back taxes, others are still not getting the message,” said Minister of Municipal Affairs Rebecca Schulz.
“This direction to the Alberta Energy Regulator will have real consequences for those delinquent companies. In Alberta, we pay what we owe and it’s time to pay up.”
The departments of Energy and Municipal Affairs have worked together on this directive. Companies will now have to confirm their unpaid municipal taxes do not exceed the maximum threshold allowed. Alternatively, they can confirm they have a repayment agreement in place whenever they apply for new licences or for licence transfers because they’re seeking to sell their assets.
This measure will help reduce unpaid taxes and reassure municipalities and Albertans that companies are financially healthy and able to meet their tax obligations.
RMA President Paul McLauchlin said the RMA is pleased to see the province take action.
“Although only a small number of companies avoid their property tax payment obligations, this issue has had major fiscal impacts on rural municipalities across Alberta. As 41 per cent of unpaid taxes are owed by companies that are currently operating, we are optimistic that this change will have an immediate positive impact in rural Alberta,” he said.
“We look forward to working with the AER and relevant ministries to determine how our members can support the AER in enforcing this new requirement.”
Under Alberta’s liability management framework, the AER revised their licence eligibility requirements to include a more holistic assessment of a company’s financial health that is applied through the life cycle of an asset. The new directive strengthens the AER’s approach by making payment of municipal taxes a necessary and mandatory condition for approval, based on available data.
The maximum threshold will be determined after reviewing the AER’s analysis of current licensee information related to unpaid municipal taxes, and in consultation with Municipal Affairs and Energy.
Municipal Affairs and the AER will work together to create an annual list of companies whose unpaid municipal taxes exceed the threshold amount. Companies on this list will be targeted by the AER to provide proof of tax payment. This approach provides the most effective opportunity to collect taxes owed without increasing unnecessary red tape for the many companies already paying their taxes as required.
Learn more by reading about Unpaid Oil and Gas Property Taxes survey on the Government of Alberta website. Read the original press release on the province’s website as well.
Red Deer-North constituents with questions, concerns or comments can reach out to the local constituency office. They can do so via the form on the contact page or by phoning (403) 342–2263.