Municipalities say unpaid oil and gas taxes should be collected from royalty revenue

A pumpjack can be seen in a field near Cremona, Alta., on Friday, July 29, 2022. (Jeff McIntosh)

Leaders from Alberta’s rural municipalities say they have tried everything in their power to force oil and gas companies to pay their outstanding property taxes, and they are calling on the provincial government to step in and collect these debts on their behalf.

A motion passed during the Rural Municipalities of Alberta (RMA) convention on Nov. 5 asks that the government of Alberta require oil and gas companies to pay their municipal taxes as a condition of being allowed to continue to develop oil and gas resources. If companies don’t willingly pay the required municipal taxes, the motion also asks that the government collect what is owing through the collection and redistribution of royalty revenues.

“Oil companies play a vital role in our communities, providing jobs, driving economic growth and paying their municipal taxes, but there are bad actors who don't pay the farm leases bills in our community, leaving rural Alberta with $251 million in unpaid property taxes, leaving our residents with the burden. the bad actors should not be allowed to operate or develop without paying their taxes,” Tamara Miyanaga, reeve of the M.D. of Taber, said.

“Oil companies cannot operate in Alberta without paying their royalties. The same must be true of municipal taxes.”

The issue of the oil and gas industries unpaid taxes was also raised by Red Deer County Mayor Jim Wood during a Q&A with Premier Danielle Smith at the convention on Tuesday.

“We don't have the necessary tools to collect. We're finding that a lot of these companies are not default companies. They're actually the companies that are operating. They're just bumming us,” Wood said.

Wood said the companies understand there is nothing municipalities can do to make them pay, and he asked for help from province.

Smith said the province needs more information before it can take any action, such as the names of the companies, the affected municipalities, and the amount of money owed.

Smith also said her concern is that many of the companies “don't really exist. They exist on paper. They're not producing anything. You're racking up the liability because you're owed the money. They're not paying because they aren't producing anything.”

Outgoing RMA president Paul McLauchlin countered that the province already has that information, and that some of the deadbeat companies are still operational.

“That information has been shared. AER (Alberta Energy Regulator) has the information. They know exactly who it is, they know exactly what is owed, and they're continuing to be allowed to operate,” McLauchlin said.

McLauchlin said one company in northern Alberta without paying municipal taxes for seven years, and despite the AER issuing dozens of infractions, it is still allowed to do business.

“The AER has been told this, and they have done nothing and will not push a company into bankruptcy for the payment and taxes,” he said.

Smith said it isn’t the energy regulator isn’t a tax collector, and that some of the functions that have been passed off to the AER should have been retained by the appropriate government ministries.

In 2022, the government of Alberta completed a survey on unpaid oil and gas property taxes in rural municipalities. At the time, a cumulative debt of $220 million was identified, with $130 million in tax arrears and $90 million in cancellations.

“A smaller but still significant portion of unpaid taxes, approximately $76 million, is owed by companies that are still operating and is potentially recoverable, including through repayment agreements,” a report on the survey states.

This $76 million debt was owed by 99 operating companies, with just 15 being responsible for 93 per cent, $71 million, of the total debt.