+ RMA Rural Municipalities
of Alberta

Resolution 2-20F

Blue-Ribbon Panel to Review Unpaid Taxes Owed by Oil and Gas Companies

Date:
November 1, 2020
Expiry Date:
December 1, 2023
Active Status:
Active
Sponsors:
Birch Hills County
District:
4 - Northern
Year:
2020
Convention:
Fall
Category:
Municipal Governance and Finances
Status:
Intent Not Met
Vote Results:
Carried
Preamble:

WHEREAS the Government of Alberta oversees the development of the province’s natural resources, grants industry the right to explore for and develop energy and mineral resources, and encourages industry investment that creates jobs and economic prosperity; and

WHEREAS rural municipalities require provincial support in the collection of the unpaid oil and gas property taxes; and

WHEREAS there may exist an inequity in paid taxes between similar properties depending on their location in rural Alberta; and

WHEREAS municipalities require property taxes to provide the infrastructure and services that industry relies on to access natural resources; and

WHEREAS Alberta’s property tax system needs amendment to prevent oil and gas companies from refusing to pay property taxes;

Operative Clause:

THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta urge the Government of Alberta to appoint an independent panel of experts to review unpaid property taxes owed by oil and gas companies and its impact on rural municipalities; and

FURTHER BE IT RESOLVED that the panel provide the Government of Alberta and rural municipalities with implementable recommendations related to the recovery of property taxes owed by oil and gas companies.

Member Background:

Alberta’s rural municipalities face a critical financial situation due to unpaid taxes owed by oil and gas companies. Rural municipalities require provincial support in the collection of the unpaid taxes.

It is time to explore new approaches and alternatives and focus on achieving a sustainable financial situation for rural municipalities. Municipalities require property taxes to provide the infrastructure and services that industry relies on to access natural resources. If Alberta’s property tax system is not amended to prevent oil and gas companies from refusing to pay property taxes, many rural municipalities will struggle to remain viable.

RMA Background:

1-19F: Priority of Unpaid Property Taxes on Linear Property

THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta (RMA) advocate for the Government of Alberta to take steps to ensure that municipalities are able to effectively recover all property taxes, including property taxes on linear property;

FURTHER BE IT RESOLVED that RMA advocate for the Government of Alberta to address the growing concern regarding unfunded abandonment and reclamation costs for oil and gas properties and the affect that those costs have on the ability of municipalities to recover unpaid property taxes;

FURTHER BE IT RESOLVED that RMA advocate for the Government of Alberta to make immediate amendments to the Municipal Government Act (MGA) to

  1. Clarify that the reference to “property tax” in section 348 includes all property taxes, including property taxes on linear property;
  2. Clarify the meaning of the phrase “…land and any improvements to the land…” in section 348 to specify that all of the property that is subject to assessment pursuant to Part 9 of the MGA within that municipality is subject to the special lien established in that section;
  3. Provide municipalities with improved enforcement powers, such as the specific power to apply to the courts for the appointment of a receiver to enforce a claim for unpaid linear property taxes against the assets that are subject to a special lien established by section 348;
  4. Apply the above amendments retroactively to ensure that existing linear property tax arrears constitute a secured claim.

Click here to view the status and government response to this resolution

6-19F: Municipal Recourse for Solvent Companies Choosing Not to Pay Taxes

THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta advocate that the Government of Alberta direct the Alberta Energy Regulator to add unpaid municipal taxes to the grounds for which a company may be denied a licence to operate in Alberta.

Click here to view the status and government response to this resolution

6-18F: Securing Municipal Property Taxes in the Event of Bankruptcy or Insolvency

THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta partner with Alberta Urban Municipalities Association to advocate to the Government of Alberta to amend section 348 and other relevant sections of the Municipal Government Act to ensure that municipal property taxes are legally assured a status as a secured claim in the event that the property owner enters bankruptcy or receivership.

Click here to view the status and government response to this resolution

Government Response:

Alberta Municipal Affairs

The Government of Alberta recognizes the ongoing concern from municipalities regarding unpaid property taxes on oil and gas properties. With the downturn in the energy industry in recent years, some of the difficulty arises from insolvency or receivership of oil and gas properties.

The province has taken measures to help alleviate the financial burden on rural municipalities. This includes delivering the Provincial Education Requisition Credit program for uncollectable taxes on oil and gas properties, and extending the program until the end of the 2021 taxation year.

Municipal Affairs continues to work with cross-ministry partners, including Alberta Environment and Parks, Alberta Energy, and the Alberta Energy Regulator, to examine the tools available to municipalities to receive and recover property taxes from oil and gas companies. However, this is a complex problem without any comprehensive solution. The best way to ensure that oil and gas companies remain viable and capable of paying property taxes is to support Alberta’s overall economic recovery, which the government continues to do through the Alberta Recovery Plan.

Development:

The Government of Alberta response makes no reference to the specific request made in the resolution: that the province appoint an independent panel of experts to review the issue of unpaid municipal property taxes by oil and gas companies. Although the Government of Alberta recently enacted amendments to the Municipal Government Act to allow municipalities to place special liens to recover unpaid taxes on oil and gas properties, no panel or working group was formed to address the broader issue of unpaid property taxes.

The Government of Alberta has demonstrated its recent willingness to conduct independent reviews, panels, and inquiries on issues that it deems significant, including the Alberta Health Services review, the COVID-19 response review, the Fair Deal Panel, and the Inquiry into Anti-Alberta Energy Campaigns. Given the province’s frequent use of independent reviews, it is disappointing that the Government of Alberta response to resolution 2-20F does not even reference the specific request in the resolution and does not explain why an independent review of this issue may not be the province’s preferred approach. Meanwhile, Alberta’s rural municipalities face approximately $253 million in unpaid taxes based on a January 20221 RMA member survey, suggesting that this issue is extremely important for rural viability.

This is an issue requiring the Government of Alberta to hold industry accountable for meeting their obligations. A panel to better understand the root of the issue and how municipalities, Alberta Municipal Affairs, the Alberta Energy Regulator, and other bodies could play a role in creating such accountability would be an important step in the right direction.

RMA assigns this resolution a status of Intent Not Met and will continue to emphasize the importance of this issue.

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