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(Canadian Press)

Municipalities to be empowered to collect unpaid taxes from oil and gas companies

Oct 28, 2021 | 3:00 PM

LETHBRIDGE, AB – The Alberta Government has introduced legislation to ensure that oil and gas companies pay their property taxes.

Amendments have been proposed to the Municipal Government Act (MGA) to clarify a special lien for unpaid property taxes on linear properties, machinery, and equipment.

If a company becomes bankrupt or decides to not pay its taxes, the proposed changes would allow local governments to convince them to pay or potentially seize property to cover outstanding debts.

Minister of Municipal Affairs Ric McIver referenced a report from the Rural Municipalities of Alberta (RMA) from February 2021 that said these companies owe a total of $245-million to 69 municipalities in justifying the amendments.

“An overwhelming majority of oil and gas companies are responsible job creators who pay their taxes. This legislation is intended to help municipalities go after those companies who refuse to play by the rules. Bad actors who ignore the rules and don’t pay their taxes force everyone else to fill in the gaps – that’s not fair.”

READ MORE: Unpaid oilpatch property taxes triple in two years, say rural municipalities

The MGA has always included provisions to allow municipalities to apply for special liens against property owners who have unpaid taxes, but in 2019, the Alberta Court of Appeal ruled that special liens did not apply to oil and gas companies.

The proposed amendments to the MGA will restore the process used prior to 2019, whereby:

  • The owner is also liable for the taxes
  • There is a 120-day redemption period to enable negotiation of payment arrangements
  • The special lien will apply to all the debtor’s assessable property within the municipality
  • The special lien applies to any unpaid taxes on linear property and oil and gas machinery and equipment currently owed including past years, and any future unpaid taxes

Paul McLauchlin, President of RMA, says local governments across the province have had to consider raising taxes or cutting services in order to make up for the reduction in revenues.

“Rural municipalities across the province have struggled to collect property taxes assessed from a small minority of oil and gas companies in recent years, leading to impacts on municipal service delivery and infrastructure investment. These legislative changes are an important step towards ensuring that municipalities have the tools to hold oil and gas facility and related infrastructure owners accountable for property tax payments at the same level of responsibility as all other property owners.”

If the proposed amendments passed, they would come into effect immediately.