M.D. of Taber seeking action on unpaid oil and gas taxes

Posted on September 19, 2024 by Vauxhall Advance

By Heather Cameron
Vauxhall Advance
Local Journalism Initiative Reporter

During a recent M.D. of Taber Council meeting, Council reviewed a letter that was sent to Reeve Miyanaga and the rest of Council from Ric McIver, Minister of Municipal Affairs that was a response to a letter Reeve Miyanaga sent to the Government of Alberta in May 2024 regarding unpaid oil and gas property taxes.

“Most companies pay their taxes, but we understand why municipalities and others are frustrated by overdue property taxes owed by some oil and gas companies,” said Minister McIver’s letter. “We share this frustration and continue to monitor the situation as we take progressive steps to address the issue.”

Minister McIver’s letter went on to remind the M.D. that in December 2021, the Government of Alberta restored special priority liens for linear property and machinery and equipment through amendments to the Municipal Government Act.

“These amendments provide municipalities with strengthened powers to enforce tax collection against oil and gas property tax debtors,” said Minister McIver’s letter. 

Following this change, Minister McIver’s letter explained, funding was also provided to the Rural Municipalities of Alberta (RMA) to develop practical resources and training to help municipalities navigate enforcing the special lien, including a guide which can be found online at: https://rmalberta.com/wp-content/uploads/2023/05/FINAL-MGA-Special-Lien-Guide.pdf. 

“The special lien does not depend on the license approval process and can be used for companies with no plans for expansion,” said Minister McIver’s letter.

Last year, Minister McIver’s letter stated, the government took additional action to address unpaid taxes by directing the Alberta Energy Regulator (AER) to make payment of municipal taxes a necessary condition for approving licensing decisions.

“Since 2023, companies must confirm their unpaid municipal taxes across the province do not exceed the maximum threshold when applying for new licenses and license transfers,” said Minister McIver’s letter. “Municipal Affairs supports enforcement of the directive through a quarterly monitoring process to collect and share municipal oil and gas tax arrears with the AER. We recognize this tool does not capture those companies with unpaid taxes with no plains of expanding or selling their licenses. Though it will take time for adequate comparative data to credibly track the evolution of arrears, evidence to date suggests the AER directive is achieving some success encouraging active companies to address their tax arrears.”

Minister McIver’s letter states that while tax recovery is underway, the Provincial Education Requisition Credit (PERC) program provides credits to municipalities for education property taxes left unpaid by oil and gas companies.

“This means municipalities are reimbursed for remitted education taxes they are unable to collect,” said Minister McIver’s letter. 

Minister McIver’s letter also highlighted that the credits provided under the PERC program appear to have peaked in 2021-2022 and are about a quarter of the peak amount for the past two years. The government, Minister McIver’s letter states, has renewed its commitment to the program with Budget 2024 announcing an extension for an additional two years up to and including the 2025 tax year.

“The Ministry of Municipal Affairs is working closely with the Minister of Energy and Minerals and the AER to assess the effectiveness of the measures we have taken to date,” said Minister McIver’s letter. “We are also working closely with stakeholders, including the RMA, to consider the next steps where necessary. The Government of Alberta is committed to a practical and balanced approach by ensuring municipalities have the tools they need to effectively administer the property tax system while allowing responsible companies to contribute to our economy and meet their financial and environmental obligations to the public.”

Council ultimately accepted this item, along with the rest of the consent agenda, as information through a motion that was carried.