Agriculture minister says province will take action on unpaid taxes from oil and gas companies

Alberta’s agriculture minister says the province is working on a long-term solution to crack down on solvent oil and gas companies that skirt paying property taxes.

Following years of pressure from the Rural Municipalities of Alberta (RMA), Agriculture Minister Nate Horner told reporters on Wednesday that his government is looking at adjusting the Alberta Energy Regulator’s mandate to take more action against property tax scofflaws.

“We’re talking about changes to data collection, personnel and mandate,” Horner said at a news conference about a new rural economic strategy. “It’s maybe more complicated than we would like to think it would be. But it’s not unachievable and something that we’re looking at.”

Horner said the government is trying to deal with both companies that fail to pay municipal property taxes, and those that leave individual property owners with unpaid costs after leasing their land. And, they’re looking to other mechanisms beyond the AER, he said.

Horner did not give more detail. Follow-up questions to the press secretary for the energy minister did not yield any more specifics, including whether the government intends to introduce legislation to make the changes, or how the AER would potentially penalize tax cheats.

The ministry of municipal affairs recently surveyed municipalities about how much tax they are owed, how many companies are using repayment plans to tackle the debt, and how the debt is affecting their operations, said press secretary Kayla Gamroth in an email. She anticipates the government will release those results in early 2023.

Municipalities and their advocates have increasingly raised the alarm about unpaid property taxes as the tally grew during the past several years.

The RMA’s last calculation, from March 2022, found municipalities were short-changed $253 million in property tax — money that pays for civic services, community centres, and local infrastructure like bridges and roads.

It has led some municipalities to cut staff and delay badly needed construction projects to keep their books balanced.

RMA president Paul McLauchlin said he was confident the government was going to close any loopholes, and said, “I think we’re not going to be talking about this a year from now.”

In 2021, the United Conservative Party government promised to tackle the issue by allowing municipalities to place special liens on oil and gas companies that skipped paying taxes.

They also enabled repayment plans. It led to municipalities racking up legal costs. Earlier this year, Ric McIver, then-municipal affairs minister, acknowledged those changes didn’t go far enough to resolve the problem.

The unpaid taxes are particularly aggravating to McLauchlin now, as oil and gas companies draw in record profits from elevated commodity prices.

As solar farms and windmills pop up across Alberta’s landscape, McLauchlin said the province needs a long-term solution that also includes the renewable energy industry.

“We need to put the tools in place to ensure that unpaid taxes — both surface leases as well as oil and gas taxes — are addressed,” he said Wednesday.

Private landowners must take any disputes to the Land and Property Rights Tribunal at their own expense, and cases can take months or years to resolve.

NDP Leader Rachel Notley said at an unrelated news conference Wednesday that the UCP government has dragged its feet on taking meaningful steps to force delinquent companies to pay what they owe municipalities. 

She said the AER should withhold drilling permits until unpaid tax bills are settled — a measure RMA has also called for.

“It is not acceptable that  we’ve got hundreds and hundreds of millions of dollars not being paid while the companies are still out there earning more,” Notley said.

The Opposition leader unveiled a five-point competitiveness, jobs and investment strategy on Wednesday. It includes a proposal to fast-track regulatory approvals for any companies that have a track record of excellent regulatory compliance.

In a Thursday morning statement, the Canadian Association of Petroleum Producers said companies should be making every effort to pay taxes and fees owed to municipalities.

“The revenues generated from the industry to municipalities play a significant role in maintaining the quality of life for rural communities which can support the industry in attracting and retaining the talent we need,” president and CEO Lisa Baiton said.

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