Alberta municipalities to recover oil taxes

The City of Lloydminster continues to use the carrot approach to collect approximately $4,800 in property taxes for oil and gas.

In a statement, it noted it does not anticipate having to apply to the Provincial Education Requisition Credit (PERC) program as it maintains positive discussions with companies that owe taxes.

PERC gives municipalities a break on their education property taxes by giving them credit for uncollectible taxes on oil and gas properties.

Lloydminster’s successful approach to collecting unpaid taxes may give way to a new directive issued from the Alberta government to the Alberta Energy Regulator (AER) to require oil and gas companies to pay taxes owed to municipalities.

The directive, issued on Monday, requires the AER to receive evidence that municipal taxes have been paid when approving licence transfers or new licences.

“While most companies pay their taxes regularly and on time, there are a few delinquent companies that owe overdue property taxes,” said Minister of Energy Pete Guthrie.

“Our goal is to reduce unpaid taxes throughout the province.”

The government conducted an Unpaid Oil and Gas Property Taxes survey in 2022 and learned municipalities were owed $220 million in unpaid taxes.

The issue has had a major fiscal effect on rural municipalities across Alberta according to Paul McLauchlin, president, Rural Municipalities of Alberta (RMA).

“As 41 per cent of unpaid taxes are owed by companies that are currently operating, we are optimistic this change will have an immediate positive impact in rural Alberta,” said McLauchlin.

Under the new directive, companies will now have to confirm their unpaid municipal taxes across the province do not exceed the maximum threshold allowed or that they have a repayment agreement in place whenever they apply for new licences or licence transfers because they’re seeking to sell their assets.

This measure will help reduce unpaid taxes and reassure municipalities and Albertans that companies are financially healthy and able to meet their tax obligations.

Municipalities have reported they already have repayment agreements in place to help collect $48 million in unpaid taxes.

There is further potential for municipalities to recoup another $28 million from companies that are still operating.

In addition to PERC, Municipal Affairs has restored a special lien in legislation to give municipalities priority over other creditors and has provided the RMA with a $300,000 grant for resources and training related to the special lien.