Rural Alberta frustrated with oil and gas 'bad actors' not paying tax as industry swims in cash

As questions loom abouthow Canada's oilpatch will spend its record profits, Alberta's rural municipalities are once again calling for whatthey're owed in outstanding property taxes.

Jason Schneider, a director with the Rural Municipalities of Alberta (RMA),says the oil boom is good news, and the majority of companies are paying their municipal taxes. But he adds there are still some "bad actors" out there who continue to operate and make record profitswhile not paying taxes.

"Unfortunately, with the way the legislation is, there's a few of them that are able to slip through the cracks and take advantage of the situation," said Schneider, who is also the reeve of Vulcan County.

"And it's quite frustrating from the municipal law standpoint, because our position is that if you can't afford to pay your taxes, you should not be operating in Alberta, period."

When asked, Schneider said the RMA wouldn't name the companies, adding it would be left up to individual municipalities if they wanted to "name and shame" the delinquent operators.

The RMAsaid in March that tardy oil and gas companies owedmunicipalities $253 million in unpaid taxes, up from an estimated $173 million in early 2020.Schneider said that number is updated once a year, and said he's cautiously optimistic that the next figure posted by the RMA will be significantly lower.

Special lien

In late 2021, the Alberta legislature passed a bill thatallows municipalities to place a special lien on owners and operators of oil and gas companies that haven't paidtheir taxes.

The Alberta Energy Regulator has also revised its licence eligibility requirements to include a financial health review, with a goal to assess whethera company can meet its financial obligations should it operate in the province.

A spokesperson for Alberta Municipal Affairs Minister Ric McIversaid the ministry expects it may take some time before the results of those efforts can be borne out.

"Municipalities have begun exploring the special lien provision to encourage oil and gas companies to pay their outstanding property taxes," said Scott Johnston in an email.

"We are partway through the first municipal tax year with this legislation in place. We will continue to monitor this issue, and we are hopeful that the legislation and our greatly improved economic climate will bring this to a positive resolution."

The Opposition NDPaccused the provincial government of not listening to rural Albertans, given McIver'sacknowledgement in March that the legislation hadn't been effective enough in getting companies to pay.

"When companies fail to pay their local taxes, it pushes more costs onto homeowners, who are already struggling with the worst affordability crisis in 40 years,"reads a statement attributed to NDPmunicipal affairscriticJoe Ceci.

"It's been six months since UCP Minister Ric McIver admitted that his plan to fix this problem had failed, but we've seen no new progress at all since then."

In a statement, a spokesperson with theCanadian Association of Petroleum Producers (CAPP)said the rules implemented by the province were supported byCAPP, and added it was the responsibility of individual companies to work with municipalities to pay their taxes and fees.

"All companies should be making every effort to ensure their taxes and fees are paid to municipalities," said Jay Averill in an email."The vast majority of natural gas and oil producers have and continue to pay their taxes, evidenced by the more than $4 billion Alberta municipalities collected from the industry over the past three years."

Budgets cut

The frustration over waiting for taxes to be paid has led to headaches for Alberta municipalities, including in Vulcan.Schneider said the unpaid taxes led the county to cut its budget by 30 per cent.

"We weren't going to pass that burden back on to our other ratepayersthat have faithfully paid their taxes," he said.

"We reduced the level of service that we offer to ratepayers, and we had to eliminate some positions. It wasn't fun. It had avery, very real impact on everybody here in Vulcan County."

Keith Brownsey, a political scientist at Mount Royal University, said the road ahead for rural communities to collect all the money they're owed will be a challenging one and the impact of those unpaid funds has had a big impact on the people who live there.

"It's had a tremendous impact. I mean, projects aren't completed. Roads aren't paved. New water filtration systems are not installed, new sewage plants all of that. The list just goes on," he said.

"If the company still exists and is making record profits, it has a legal and moral obligation to pay its taxes, just like the rest of us."