+ RMA Rural Municipalities
of Alberta

Resolution 17-01F

Relief from Uncollectable Education Tax

January 1, 2001
Expiry Date:
December 1, 2004
Active Status:
Vote Results:

WHEREAS municipalities have the authority under the Municipal Government Act to tax oil and gas wells and batteries and pipelines and the related equipment, based upon linear assessment information provided by the Government of Alberta;AND WHEREAS under provincial legislation the taxes receivable include an education tax which is collected by municipalities on behalf of the Government of Alberta;AND WHEREAS under federal legislation, in the event of a bankruptcy, the municipality is not a preferred creditor for the total amount outstanding (including Linear Assessment and Education Tax);

Operative Clause:

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties urge the Government of Alberta to provide relief to municipalities, either through the Orphan Well Program or via provincial General Revenues, for the write-off of the Education Tax portion of any taxes receivable created by Linear Assessments, as a result of the bankruptcies of corporations. AND FURTHER BE IT RESOLVED that the AAMDC urge the Government of Canada to amend the Bankruptcy Act Order of Priority to classify all municipal taxes as a preferred creditor in the event of bankruptcy proceedings.

Member Background:

Our municipality had two large write-offs of taxes receivable in the year 2000 due to the bankruptcy of two oil and gas corporations. We are aware that the Municipal District of Greenview had a large write-off for taxes outstanding from coal corporations. From time to time, other municipalities have also had similar tax account write-offs.Unfortunately, these write-offs include linear assessment and education taxes assessed. Since education taxes are simply a flow-through between the municipality and the taxpayer to the Provincial Government, it is not appropriate that municipal ratepayers subsidize the education assessment write-off. In addition, it is not appropriate that municipal ratepayers subsidize linear assessment write-offs that are not fully classified as a preferred creditor under the Bankruptcy Act.

RMA Background:

AAMDC members passed a number of resolutions in the early 1990s dealing with concerns about the inability to collect property taxes owing from energy industry properties. However, none of these resolutions remain in effect, and none of them dealt directly with the issue of education property tax (as these resolutions were passed prior to the regionalization of school boards and the centralization of control over education property tax).

Provincial Ministries:
Municipal Affairs
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