Photo: Government of Alberta

By Shaun Penner

Assessment Review

Toews says no decisions yet made on Linear Assessment Model

Oct 6, 2020 | 3:58 PM

Alberta’s finance minister says no decisions have been made in regards to any changes being made to the linear assessment model for oil and gas infrastructure in the province,
which has many rural municipalities across Alberta sounding the alarm about steep property tax hikes, should these proposed changes go through.

Travis Toews issued a statement on the matter, where he acknowledges that he has heard from many area residents and Albertans that are concerned with potential changes that could drastically reduce the assessed values on oil and gas equipment like wells and pipelines, leading to a steep decline in a rural municipalities tax revenues that would need to be made up through tax hikes to ratepayers.

“It is important to note that at this point, no changes have been made,” said Toews. “I have engaged with concerned municipal leaders and stakeholders. The review is still very much in the consultation phase.”

Following a nearly year-long, provincial government-led consultation on how infrastructure is assessed, four scenarios were brought forward for the province’s consideration. All four of those proposals would in turn lead to a reduction in how much municipal taxes would be paid annually on that infrastructure, ranging from seven to 20 per cent.

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Several Peace Region municipalities were quick to raise concerns about those proposed changes, including the County of Grande Prairie, which suggested that in the most extreme scenario, ratepayers could see an increase in their property tax bill of 52 per cent.

“As your MLA and a resident of the County of Grande Prairie and ratepayer myself, I understand the concerns that have been brought forward by many of my constituents,” said Toews. “In these challenging times, it is imperative for all levels of government to ensure services are delivered appropriately, and that each tax dollar collected is used in the most efficient and cost-effective manner possible.”

However, Toews did stress about the downturn the oil and gas industry has seen in the province since 2008, noting “oil and gas business value has decreased from $380 billion in 2008 to $117 billion in 2020”. He suggests that municipalities across Alberta over that same time period saw a revenue increase of 48 per cent per person.

“Many Albertans understand that the energy industry will play a significant role in the province’s economic recovery. A very competitive business environment is vital to attracting investment which positions the province for investment attraction, which leads to economic growth and job creation.”

Toews cited an example that he says creates an uncompetitive business environment to attract such investment. He says property taxes on a four-well pad in the Montney Zone of B.C. are about $2,882 a year, while on the Alberta side, it is $66,907

“While it is not necessary to be perfectly competitive with our neighbouring provinces on this one issue, as there are other competitive advantages such as the business tax rate, it is important that Alberta is competitive enough to ensure that investment is not driven across provincial borders.”

No changes are being made to the province’s assessment model for this year, and Toews says discussions are ongoing. He says the goal is to find the right balance between supporting the energy sector while maintaining fiscal stability for municipalities.

“As Alberta continues to look to economic recovery, it is imperative that we carefully evaluate every aspect of our business environment, including the property tax rates imposed on our oil and gas sector. This will ensure that Alberta remains competitive, increases fiscal capacity and continues to attract investment to create jobs for Albertans.”

Leader of the NDP Rachel Notley said on Tuesday that the United Conservatives should not go forward with any proposed changes to the assessment model on oil and gas infrastructure, which she says will only download costs onto rural Albertans without any promise of investment coming to Alberta

READ MORE: NDP wants province to stop oil and gas assessment changes