File this one under oil and gas not loving Alberta back. The Rural Municipalities of Alberta, an advocacy group representing 69 of Alberta’s rural counties and municipal districts, reports that oil and gas companies are refusing to pay about $245 million in taxes that they owe to towns, villages and hamlets across the province.
And their president is prepared to escalate matters further. “The RMA will name and shame these deadbeat oil companies unless this problem is fixed by the Alberta government soon,” said Paul McLauchlin, president of the RMA.
Photo courtesy of the Orphan Well Adoption Agency.
It’s a huge pot of money for these small communities who are already struggling with the increased expenses and lowered tax revenues of Alberta’s disastrous COVID situation. And it’s not a problem that appeared out of thin air. Last spring, before the distraction of the pandemic, municipalities were already raising the alarm that oil and gas companies were failing to pay their fair share.
The response from Alberta’s UCP government wasn’t to fill the gap, either. In fact the province had already been very aggressively chiseling away at municipal budgets: crown land grants and the Municipal Sustainability Initiative took significant cuts, a huge portion of policing costs were dumped from the provincial budget onto municipalities’ shoulders, and some provincially-collected taxes that were formerly handed over to towns and cities were clawed back by the government.
The MacKinnon report — written by Janice MacKinnon and commissioned by the UCP to provide cover for austerity measures shortly after they gained power —”made it clear that municipalities must shoulder more of the responsibility for major projects,” said Finance Minister Travis Toews back in 2019.
The reaction by the UCP to the RMA’s warnings last spring, in fact, was to let deadbeat oil and gas companies off the hook. Last October the Alberta government gave the industry a three-year tax exemption for any new pipeline or drilling projects, and were set to go even further, proposing a giant tax cut that would essentially zero out all of the missing property taxes owed to these communities. Strong opposition from municipalities put that plan on hold but it’s not gone for good. The UCP administration is continuing to ‘consult’ about just how big the tax break will be—it’s been delayed, not cancelled.
Kenney and the UCP haven’t pushed that tax break through yet, but municipalities still aren’t getting their money. Perverse loopholes in Alberta’s tax laws mean that oil and gas companies can often just get away with ducking huge tax bills. Researching this issue for The Narwhal, Sharon J. Riley pointed out a few recent examples: Stettler having to eat a $4 million loss to a deadbeat oil and gas company in 2019, Big Lakes County cheated out of $6 million through 2018-2019, and Lacombe County left holding the bag for $600,000 in 2019.
If you fail to pay your own property taxes, municipalities can and will go after you in all sorts of ways; they have the authority to put liens on your property and auction it off to pay what you owe. But not if you’re an oil and gas company. Thanks to the rules in Alberta, municipalities have little recourse when it comes to oil and gas deadbeats.
“There is no reason why oil and gas companies should have an option to pay property taxes and face no consequences if they choose not to. Not only does this non-payment impact municipalities providing the infrastructure that those companies use every day, but it is also disrespectful to every other homeowner and small business in the municipality who will see their taxes increase or their service levels decrease due to the irresponsibility of some oil and gas companies,” said McLaughlin.
He’s more polite than we would have been, but he’s right. The oil and gas industry should not have the right to simply decline to pay taxes. And Alberta’s government seems set on heading in exactly the wrong direction, pushing to let this parasitic behavior fly while sticking rural Albertans with the bill, just like they have on the orphan well file.
If you are an Albertan living in a rural community today and you oppose letting deadbeat oil and gas firms skip out on their taxes, it’s time to lean on your MLA. Emails are easily dismissable but phone calls and letters often do apply some pressure. You can find the contact information for your MLA online.
After a year of the provincial government refusing to help—and watching it actually make matters worse—the RMA is wise to be escalating their response. If they ever want to see a cent of what they’re owed, these rural municipalities need to start playing hardball.
With files from Duncan Kinney.