Oil and gas revenue may be working in favour of the Alberta government, but indications are that's far from the case for rural municipalities.
The Rural Municipalities of Alberta (RMA) member survey indicated that as of December 31, 2022, approximately $268 million in property taxes has gone unpaid by oil and gas companies to rural municipalities, 6.1 per cent higher than the 2021 tax year, and 231.5% higher than 2018, when RMA first started collecting the data.
RMA is calling upon the Alberta Energy Regulator to address the issue by prohibiting any company in arrears on property taxes or surface leases from operating.
RMA president Paul McLauchlin says a failure to do so means the AER is propping up ‘zombie companies’ on the backs of rural municipalities because they lack the proper regulatory and accountability framework to properly address the impacts of poorly regulated companies failing.
- Rural municipalities frustrated by unpaid oil and gas taxes
- Unpaid taxes has reached crisis point, says RMA president
McLauchlin is clearly frustrated that the outstanding debt continues to grow, despite pursuing the provincial government for the last four years to take firm action.
He says rural municipalities continue to be treated as a piggy bank by some oil and gas companies, even as industry profits and government royalty revenues soar.
“Given the success of the industry and the wealth it has generated, I am shocked that I still have to discuss this issue and that rural municipalities and rural property owners continue to be forced to subsidize an industry in a massive boom period," says McLauchlin.
"While oil and gas revenues flow to the government as royalties or out of the province to shareholders, industry and the provincial government assume rural municipalities can magically maintain service levels even as they face an average shortfall of nearly $4 million due to non-payment of taxes.”
The survey indicates operational companies are responsible for 41 per cent of the $268.5 million unpaid tax burden, more than $110 million. It believes this suggests that for many companies, not paying property taxes is a choice without consequences.
RMA says it's a sign that previous government attempts to address the issue have been ineffective.
“The Government of Alberta has allowed legislative and regulatory gaps to remain in place and the industry continues to take advantage of them, even in good economic times,” says McLauchlin. “The fact that many years after this issue arose, 41% of unpaid taxes are from operational companies shows a complete failure on the part of the Alberta Energy Regulator (AER) to ensure that the industry operates in the public interest."
Rural municipalities are using the limited enforcement tools and their disposal and RMA says it's time for the AER to step up.
“While we’ve gone in circles with the province and AER on this issue over the years, the solution is simple: if a company wants to continue to extract and sell Alberta’s oil and gas resources, they must make property tax and surface lease payments," says McLauchlin.
He says many municipalities are being forced to reduce service levels, increase tax rates on other property owners, and even lay off staff due to these unpaid taxes.