Most companies operating in Alberta’s energy sector pay their local property taxes but in recent years some have not, leaving municipalities with hard decisions about raising taxes for other taxpayers or cutting services.
If passed, amendments to the Municipal Government Act will restore a special lien that municipalities can use to require oil and gas companies to pay overdue property taxes. This means if a company becomes bankrupt or decides not to pay their property taxes, municipalities will have a tool to convince them to pay or else property may be seized to cover outstanding debts. As a result, municipalities will be more likely to recoup the revenue they are owed.
“An overwhelming majority of oil and gas companies are responsible job creators who pay their taxes. This legislation is intended to help municipalities go after those companies who refuse to play by the rules. Bad actors who ignore the rules and don’t pay their taxes force everyone else to fill in the gaps – that’s not fair.”
“Rural municipalities across the province have struggled to collect property taxes assessed from a small minority of oil and gas companies in recent years, leading to impacts on municipal service delivery and infrastructure investment. These legislative changes are an important step towards ensuring that municipalities have the tools to hold oil and gas facility and related infrastructure owners accountable for property tax payments at the same level of responsibility as all other property owners. RMA appreciates the Government of Alberta recognizing the importance of this issue and looks forward to working with provincial decision makers to ensure that the changes announced today make a meaningful difference for municipalities and all taxpayers across the province.”
PERC program extended
Restoring the special lien builds on a provincial program that already helps municipalities that are struggling to collect taxes related to oil and gas production. Since 2017, the Provincial Education Requisition Credit (PERC) has been allowing municipalities to offset uncollectable education property taxes on delinquent oil and gas properties with an equivalent tax credit. The PERC program will be extended to the 2023-24 fiscal year to give municipalities time to use the special lien, if necessary, to seek the taxes they are owed.
Quick facts
- In February 2021, the Rural Municipalities of Alberta surveyed its 69 member communities and found approximately $245 million in property taxes owed to rural municipalities by oil and gas companies were unpaid, a 42 per cent increase from 2020.
- Approximately 40 to 60 per cent of unpaid taxes are the responsibility of companies that continue to operate in Alberta, while the remainder are facing insolvency.