Bill to make Alberta oil and gas companies pay outstanding taxes falls short, municipalities say - Action News
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Bill to make Alberta oil and gas companies pay outstanding taxes falls short, municipalities say

Proposed changes to legislation would allow municipalities to strong-arm oil and gas companies into paying outstanding property taxes. Some municipal leaders say the efforts wont go far enough.

'Not certain this is exactly the toolkit we need,' says Woodlands County mayor

Oil and gas companies across Alberta owe municipalities a total of $245 million in unpaid property taxes. (Reuters)

Proposed legislation would allow Alberta municipalities to strong-arm oil and gas companies into paying outstanding property taxes, but some municipal leaders say the efforts are coming too late and won't go far enough.

Oil and gas companies currently owe Alberta rural municipalities about$245 million in unpaid taxes.

Bill 77, the Municipal Government (Restoring Tax Accountability) Amendment Act, would allow municipalitiesto puta special lien on owners and operators of oil and gas companies that owe taxes.

The company would have 120 days to pay upor strike a payment planbefore the municipality could seize property within its borders.

The special lien would bump a municipality higher up on the list of creditors to be paid should the company go bankrupt.

John Burrows, mayor of Woodlands County in northern Alberta, said the tools would help municipalities, but that he is "not certain this is exactly the toolkit we need."

Burrows said the Alberta Energy Regulator (AER), as the licensing entity, would be better suited to ensuring companies are paying taxes by suspending licences or restricting operations.

He said he'sseen companies not pay taxes in three years and then be approved to buy bankrupt oil and gas assets.

AER spokesperson Ami Broomsaid in an email that a directive was updated this year to "increase scrutiny that the AER applies when determining licence eligibility."

With that updated directive, the AER can request information from companies about unpaid taxes when determining eligibility for licences.

Broom said the AERassesses whether a company has the "financial capacity to address their regulatory and liability obligations," and this is when unpaid taxes may be considered. But, "applications are not automatically rejected if unpaid municipal taxes or surface lease payments are identified."

Only a small percentage of companies aren't paying their taxes, but they're having a huge impact for some municipalities.

Woodlands County, based outside of Whitecourt, has an annual operating budget of $17 million. Over the last three years, oil companies have owed the county$12 million in unpaid taxes.

Burrows said the county laid off eight people, increased taxes, and islagging behind on some infrastructure projects.

He said the proposed legislation would arrive too late to help Woodlands County as about 60 per cent of companies that oweoutstanding property taxes are now bankrupt.

Municipal Affairs Minister Ric McIver introduced Bill 77 in late October, calling it "a hammer" that municipalities need.

Greg Smith, McIver's press secretary, said the proposed amendments will "restore and clarify tools that municipalities can use to collect overdue taxes."

But allowing the AER to access tax information would be "outside the scope of the Municipal Government Act," Smith said in an emailed statement.

Leanne Beaupre, reeve of the County of Grande Prairie, said the county has been able to work with some companies to make payment arrangements. The county is still owed $2 million lost revenue that Beaupre said "would go a long ways into paving roads."

Giving municipalities the power to become secured creditors "gives us some leverage," she said.

'Dire for some communities'

Paul McLauchlin, president of the Rural Municipalities of Alberta, said he's cautiously optimisticabout the proposed amendments.

He said some communities have up to 30 per cent of their outstanding taxes for 2020tied to oil and gas.

It's "pretty serious and pretty dire for some communities," McLaughlin said.

He said it has been happening since about 2015, and it's been depleting capital reserves.

"In the past, we've had no remedies available to us."

But McLauchlin said seizing assets can be complicated, especially when it comes to operations and liability. .

He added more than 95 per cent of oil and gas companies are paying their taxes on time.

"This is really a small amount of people causing a lot of problems," said McLauchlin.

Some municipalities have taken different steps to try and recoup unpaid taxes. In the Regional Municipality of Wood Buffalo, the municipality is suing Sunshine Oilsands Ltd. for almost $16 million.

The lawsuit was filed in June 2020 and Sunshine Oilsands has not filed a statement of defence.

Wood Buffalo Mayor Sandy Bowman declined an interview. But in an emailed statement, BowmanthankedMcIver for listening to municipalities and called the proposed changes "a good step."