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WHEREAS the Alberta Fuel Tax is a direct tax on consumers for the purchase of all unmarked fuel in Alberta; AND WHEREAS Alberta Finance is offering a Tax Exempt Fuel Use for several industry sectors including oil and gas drilling, production and exploration of oil and gas geophysical or seismic data industries, the Alberta Farm Fuel Benefit Program and the Farm Fuel Distribution Allowance; AND WHEREAS the Alberta Fuel Tax is a tax on municipalities by the Province of Alberta; AND WHEREAS the current tax rates set by Alberta Finance are 9 cents / litre for gasoline and diesel, and 6.5 cents / litre for propane; AND WHEREAS the reduction of the provincial portion of the fuel tax would positively impact the cost of municipal operations;
THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties request the Province of Alberta eliminate the provincial portion of tax on fuel used in municipal operations.
Current infrastructure maintenance and operations funding pressures on municipalities are well documented and have been the subject of numerous debates. Discussions at federal, provincial and local government levels are ongoing in an effort to identify avenues of funding to avert potentially impending crises, as municipalities attempt to provide and maintain suitable infrastructure from limited funding sources. At the same time, municipalities are encountering rapidly increasing expenses as the demand for private contractor services in the current heated economic climate is outpacing service availability. This is resulting in increased construction prices and a reduction in municipalities’ ability to address infrastructure needs. An additional factor impacting the increase in expenses is the uncertainty of long-term funding for infrastructure maintenance, as the continued availability of grant funds is subject to changing factors of political demand. As such, long-term planning for maintenance and construction activities is impacted negatively due to the need to plan for the shorter time horizon. The matter of provincial taxation of municipalities through the provincial portion of the fuel tax, with the subsequent need to return additional funds to the municipalities for infrastructure construction and maintenance, is seen as the addition of unnecessary administrative expense without any accompanying benefit. As a matter of policy, the Province currently allows for exemption from fuel tax for a number of sectors of the oil and gas industry in recognition of the importance of those activities to the welfare of the province. The health of municipal infrastructure is at least as important since without that infrastructure the activity of the oil and gas sector would be adversely impacted. The intent of this resolution is to improve the ability of Alberta municipalities to fiscal priorities without adding to administrative responsibilities associated with grant program application and reporting processes. The resolution also supports the long-term health of the provincial economy by ensuring that the infrastructure necessary to support economic activity remains in good condition.
The Government of Alberta is not considering a program to relieve municipalities of their fuel tax responsibilities at this time. The Association believes that before discounting an elimination of the gas tax on municipal operations, a model for refunding a portion of that gas tax back to the municipality should be investigated. This model would outlines ways to help pay for vehicle maintenance and staff recruitment and retention.