The Canadian Association of Petroleum Producers (CAPP) said they are reviewing details of a new directive from Alberta’s Energy Minister over unpaid municipal oil and gas taxes with their members.
On March 20, Peter Guthrie issued a ministerial order requiring the Alberta Energy Regulator (AER) to ensure municipal taxes have been paid when approving license transfers or new licenses.
“CAPP unequivocally agrees that all companies should be paying their taxes and fees to municipalities. We are reviewing the details of the new directive to the Alberta Energy Regulator (AER) with our members,” said Jay Averill, a spokesperson for the CAPP in an emailed statement.
The order was issued under the Responsible Energy Development Act and was worked on by both the Energy and Municipal Affairs departments.
The directive requires companies who are applying for a new license or a license transfer for selling off assets to confirm unpaid municipal taxes do not exceed the maximum threshold allowed or that the company has a repayment agreement in place, according to a press statement from the province.
“The new directive strengthens the AER’s approach by making payment of municipal taxes a necessary and mandatory condition for approval, based on available data,” the statement read.
There is no current maximum threshold, but the province said that threshold will be determined after a review of the AER’s analysis of “current licensee information related to unpaid municipal taxes.”
The province plans on creating an annual list of companies who have unpaid municipal taxes exceeding the threshold amount. This list would be created by the Municipal Affairs department and the AER.
Companies on the list will be “targeted by the AER to provide proof of tax payment,” and this will prevent companies that are paying their taxes from having to go through additional “red tape,” the statement said.
Paul McLauchlin, president of Rural Municipalities of Alberta (RMA), said in a statement the RMA is “pleased” action is being taken.
“Although only a small number of companies avoid their property tax payment obligations, this issue has had major fiscal impacts on rural municipalities across Alberta,” he said.
On March 7, the RMA released a report that showed municipalities across Alberta had an overall unpaid oil and gas property tax burden worth $268.5 million.
McLauchlin said the RMA is “optimistic” the change will have an “immediate positive impact.”
In July 2022 the province conducted a survey, Unpaid Oil and Gas Property Taxes, and found out of 55 of the 71 rural municipalities that responded 52 reported unpaid tax data worth $220 million, $130 million of those in tax arrears and $90 million in cancellations, the press statement said.
“Many of these taxes will not be recoverable outside insolvency proceedings because they are owed by companies no longer operating or because the taxes have already been written off by municipalities, or both,” according to the press statement.
The press document states $76 million is owed by companies that are still operating and is “potentially recoverable.”
There are repayment agreements in place to collect $48 million in unpaid taxes, said the province, and “further potential for municipalities to recoup another $28 million from companies that are still operating.”
By Jessica Nelson, Local Journalism Initiative Reporter
Original Published on Mar 30, 2023