By Shaun Penner

Bill 77

MGA amendment aims to help municipalities collect unpaid oil and gas company taxes

Oct 28, 2021 | 3:00 PM

The United Conservative government has put forward an amendment to the Municipal Government Act, which if passed would give municipalities a leg up in collecting unpaid property taxes from oil and gas companies.

Minister of Municipal Affairs Ric McIver introduced Bill 77: Restoring Tax Accountability in the legislature Thursday. The amendment proposed in the bill would restore a municipality’s right to place a special lien against oil and gas companies that are delinquent in taxes, which could result in the municipality seizing a company’s property.

“We know that the overwhelming majority of oil and gas companies create good-paying jobs and pay their bills, including their taxes, on time,” said McIver. “However, a few bad actors are ignoring the rules and refusing to pay what they know they owe.”

This comes as rural municipalities across Alberta continue to be hampered by millions in unpaid taxes.

A survey commissioned in February 2021 by the Rural Municipalities of Alberta, which received responses from all its 69 member communities, found approximately $245 million in property taxes owed by oil and gas companies were unpaid. This represents a 42 per cent increase from 2020.

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Peace Region municipalities are also not immune to the issue. In 2020, the County of Grande Prairie was owed $2 million in back taxes from the oil and gas industry, while Birch Hills County was owed $552,000.

“Tax shortfalls mean Albertans and companies from those municipalities must pick up the slack for those who choose not to pay, and that is just not fair,” said McIver.

“Some municipalities have been left with financial holes in their budget, and difficult choices about whether to cut services or whether they have to raise taxes on the rest of their citizens.”

The province says 40 to 60 per cent of the unpaid taxes are the responsibility of companies that continue to operate in Alberta, while the remainder are facing insolvency.

McIver adds as it stands now, municipalities are often placed at a lower priority than other creditors when trying to collect from companies who have gone insolvent, leaving them with little if anything to collect.

He says this special lien will help eliminate that issue.

“Simply put: if a company goes bankrupt, or just decides not to pay its taxes, the municipality it owes money to will not have to stand in line behind other creditors to be paid.”

McIver also announced the province will be extending the Provincial Education Requisition Credit (PERC) through to the 2023/24 fiscal year.

The program, offered since 2017, has allowed municipalities to offset uncollectable education property taxes on delinquent oil and gas properties with an equivalent tax credit.