Rural Alberta still dealing with unpaid oil and gas taxes as industry boom year nears close

Rural Alberta continues to feel thefinancial strainof outstanding propertytaxes from the oil and gas industry, while the sectorwraps up a year thatdelivered record profits.

Tardy oil and gas companies owed municipalities $253 million in unpaid taxesas of March 2022, up from an estimated$173 millionin early 2020, according to the Rural Municipalities of Alberta (RMA).

New numbers will be released in January, said Jason Schneider, a director with the RMA and thereeve of Vulcan County,and his expectationis that the number will increase.

Though the vast majority of oil and gas companies in the province are good corporate citizens, he said, a few "bad actors"are embarrassing the sector.

"And it's absolutely frustrating,"Schneider said.

TheARC Energy Research Instituteprojects the industry will produceafter-tax cash flow of more than$150 billion this year. The Alberta government expectsto realize a $12.3-billion budget surplus, bolstered byoil and gas royalties.

Policy priority

In November,Municipal Affairs Minister Rebecca Schulz spoke to theRMA convention in Edmonton, citing the unpaid taxes as a priority in her new role.

Paul McLaughlin, the RMA's president, said at that time that he wanted the Alberta government and the Alberta Energy Regulator to get tough on scofflaw companies.

The provincial government has in the past cited a bill passed in late 2021 that allows municipalities toplace a special lien on owners and operatorsof oil and gas companies that haven't paidtheir taxes.

So far, that lien has not been effective, according to Schneider.

"We've had zero success with that previously. You can spend a lot of money on lawyers, putting registered liens on the assets, that they just walk away from in the end," Schneider said.

"The province still sits and says, you know, they're aware of the problem, but they're not doing anything. It's absolutely mind-blowing that we're this many years down the road, this loophole still exists, people are still taking advantage of it."

The unpaid taxes have led to strains on the finances of municipalities, including in Vulcan County. The county previously reduced the level of service that it offered to ratepayers and had to eliminate some positions.

Provincial survey and framework

Kayla Gamroth, a spokesperson for Alberta Municipal Affairs, wrote in a statement that the province recognizes that the unpaid taxes are an important issue for municipalities.

"We are committed to working with the AER and municipalities to reduce the amount of overdue taxes," she said.

She said thatmost uncollected taxes are the result of bankrupt companies and inactive or non-producing wells.

Schneider agreed that was part of the picture, but said a lot of those had been written off by companies. He added that operating companies with active wells not paying taxes was the loophole the RMA was trying to get closed.

The provincial government has worked to strengthen its the liability management framework, Gamroth said, and has worked with the AER to helpenforce it.

The ministry has also conducted a survey and was currently analyzing its results, adding that it would provide additional context while the province assesses potential next steps.

"We are also looking at whether there is anything more that can be done within our regulatory framework to make sure companies that operate in Alberta meet their responsibilities to municipalities," Gamroth said.

Significant amount of funds

CBC News asked the Canadian Association of Petroleum Producersfor comment Tuesday.

CAPPsaid in August that it was the responsibility of individual companies to work with municipalities to pay their taxes and fees.

"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," a spokesperson saidin an email at the time.

But the amount of money involved is significant for rural communities and poses real concerns, said Keith Brownsey, a political scientist at Mount Royal University.

"What if you and I didn't pay our municipal taxes on our house, on our other buildings, on our businesses? We would soon be out of business, and those businesses would be taken away from us," he said.