The exponential growth of unpaid property taxes from Alberta’s struggling oilpatch is threatening small communities and they need new ways to enforce the rules, says the group that represents them.
“I’m going to use the word crisis,” said Paul McLauchlin, president of Rural Municipalities of Alberta. “This becomes a viability conversation for municipalities.”
The association released a survey Thursday showing that the amount of outstanding property taxes from the oilpatch has tripled since 2019.
The industry owes $245 million — more than half of which is from operating companies.
McLauchlin said the average owing to each of the group’s members is $3.5 million. The debt can equal anywhere from 10 to 20 per cent of a rural municipality’s budget.
As the energy industry faces generally declining prices and falling production, some companies are cutting costs by not paying their taxes. Unpaid taxes totalled $81 million in 2019 and $173 million last year.
The industry has said the way taxes are assessed is driving companies out of business. Properties are assessed by the provincial government, which evaluates them using replacement cost and not on market value.
McLauchlin said “civil disobedience” on the part of the companies is not the answer.
“If I felt my federal taxes were too high, and I decided not to pay my federal taxes, what would be the ramifications of that?” he asked.
“I view this on the same level as an environmental liability.”
Amount of unpaid property taxes oil companies owe rural municipalities soaring
McLauchlin wants the Alberta Energy Regulator to ensure taxes are either paid or a payment plan is in place before it approves licence transfers for wells, pipelines or other assets. He also wants the regulator, before it grants licences, to pay closer attention to a company’s ability to pay its taxex.
“It’s a completely simple metric. It’s practical and makes complete sense from an operator’s standpoint.”
Rural communities also want more ways to be able to enforce tax collection. Right now, they are forbidden by law from placing liens or taking other measures on property such as pipelines.
“In this case, I can’t seize assets,” said McLauchlin, also the reeve of Ponoka County.