Unpaid oil and gas taxes causing concern for rural Alberta municipalities

Over $250 billion in oil and gas taxes have gone unpaid over the last half decade in Alberta, leaving rural municipalities hanging.

It’s a polarizing topic that’s ignited a debate, one that has the potential to impact tax bills for those living in the southern Alberta town of Taber.

Tamara Miyanaga is the reeve of the M.D. of Taber and said the unpaid taxes hurt the residents of her municipality above all else.

“We make sure it’s made well aware that in (the) 2024 budget, we’re budgeting $700,000 of uncollected oil and gas taxes. That’s too much for any resident to have to endure, so they’re not happy about it, they want everyone to pay their fair share of taxes,” said Miyanaga.

This means residents of the M.D. of Taber are, on a per capita basis, paying $100 every year extra on their taxes to cover the lost revenue. This is something the Rural Municipalities of Alberta (RMA) say is unacceptable.

“That burden gets borne by all Albertans and specifically, rural Albertans,” said Paul McLauchlin, president of the RMA.

“We can’t deficit budget, so taxes that aren’t paid by operating oil and gas companies, those come out of reserves and those reserves were actually meant for capital replacements.”

For every dollar not paid in taxes, municipalities must choose to either fill with raised taxes, or else drop a purchase. A purchase could be roadwork, municipal programs or any other municipal funded payment.

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“We either choose not to proceed with some operations and programs or we have to cover that money across the municipal tax base, which impacts every resident and business in our municipality,” said Miyanaga.

According to the RMA, up to 40 per cent of companies with tax arrears have gone under, never paying what’s owed.

“When they go bankrupt, they cause irreparable harm to mom-and-pop welding operations, tank hauling operations,” said McLauchlin.

“The last company that went under — $300 million in receivables by small companies all over rural Alberta.”

He says the Alberta government needs to take a stronger approach when dealing with delinquent payers.

“We really want to see a heavy hand by this government, we want to see the (Alberta Energy Regulator) coming down on this, like they should have from the get-go and we need to make sure that this just never happens again.”

In a statement to Global News, the office of Brian Jean, Alberta minister of energy and minerals, says solutions are coming.

“We have discussed this with municipalities and everyone wants productive assets in the hands of companies who can pay taxes as opposed to in the hands of the Orphan Well Association, which is not required to pay municipal taxes.  We are looking for practical solutions to historical issues that nobody was prepared to deal with and have been ignored for decades. We are sticking up for rural Albertans and their needs and will have more on this in the coming weeks and months.”

In a separate statement, the Alberta Energy Regulator says they simply cannot collect the unpaid taxes on their own.

“The AER does not have the authority to collect municipal tax payments; this responsibility falls under the jurisdiction of the individual municipalities.”

However, they say modern provisions are enabling new opportunities to collect payments.

“Since May 2023, the AER has had the authority to review applications for new well licences or well licence transfers to confirm applicants do not have municipal tax arrears above $20,000. This authority was recently updated through Ministerial Order 096/2024, which continues the requirement but now includes new provisions for the transfer of orphan wells and specific conditions for tax arrears payments.”

Even so, McLauchlin says this just needs to stop.

“We need to drain the swamp. We need to pull the pin. Companies that aren’t paying their surface leases and taxes should not be permitted to operate an oil and gas facility in the province of Alberta, plain and simple. We’ve been asking for the same thing for five years; I’m asking for the same thing today.”

McLauchlin also serves as reeve of Ponoka County. He says the municipality has the power to seize land from property owners who fail to pay taxes, but they aren’t afforded the same power when oil and gas companies fail to pay.

“If you owned a property in rural Alberta and didn’t pay your taxes, we actually have opportunities to seize your land, actually put it up for auction, pay our taxes and our penalties back to the municipality, then the landowner would get the remainder,” McLaughlin said.

“The fact that these are surface leases, we can’t do that because if we seize the land, then the farmer (who) owns that land would become part of that conversation. I’d never be elected as the reeve of Ponoka County again if I started seizing my neighbours property for someone else’s taxes.”

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