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To help it collect almost $21,000 in unpaid taxes from delinquent oil and gas companies, the MD of Willow Creek is complying with a provincial government request for information.
“Let’s rat out the bad actors,” said Deputy Reeve Glen Alm, who in the absence of Reeve Maryanne Sandberg was chair at the Nov. 13 council meeting.
In an Aug. 13 letter directed to Rural Municipalities of Alberta president Paul McLauchlin and introduced at the council meeting, Alberta Energy and Minerals Minister Brian Jean said, “The government of Alberta takes the issue of unpaid municipal property taxes seriously and expects oil and gas producers to pay their taxes.”
Alberta’s oil and gas industry pays about $1.6 billion in municipal taxes annually.
“It is clear the vast majority of companies pay their taxes, but we understand why municipalities are frustrated by overdue municipal taxes from a handful of operating oil and gas companies,” Jean wrote. “We share this frustration.”
From the 2022-’23 Willow Creek MD tax roll, Lorad Energy Inc. is in tax arrears for $73.03; Topanga Resources for $9,595.25; Lexin Resources Ltd. for $6,777.07; Shale Petroleum Operating Ltd. for $4,180.30; and Vanreena Resources for $26.50; for a total of $20,652.15.
Jean added resolving municipal tax arrears is a complex issue and involves multiple interests requiring collaboration among all affected stakeholders.
Jean explained to Rural Municipalities of Alberta members the property taxes assessed to oil and gas companies by municipalities under the Municipal Government Act contribute to the sustainability of communities across Alberta.
In the past 10 years, “the oil and gas industry has faced multiple global economic challenges and continues to adapt to global challenges, demand cycles, and the energy transition.”
These have all affected local governments and the government of Alberta.
Because of recent challenges in the oil and gas industry and the resulting impacts to local government revenues, Jean explained the government of Alberta has acted to support municipalities by implementing a suite of improvements.
As an example, the Provincial Education Requisition Credit program provides municipalities with an education property tax credit equal to the uncollectable education property taxes on delinquent oil and gas properties for the 2015 through 2025 tax years.
Restoration of a special priority lien in 2021 under Bill 77 for linear property and machinery and equipment, is applicable to all a debtor’s assessable property within the municipality and gives municipalities priority over other creditors (apart from the Crown and environmental liability obligations) for unpaid taxes.
The MD of Willow Creek now must send the ministry a council resolution which includes the details of the tax arrears, the steps taken by the municipality within its toolkit to collect them, and an unambiguous request to the minister of energy and minerals to employ all available tools to aid the municipality in the tax collection.
In response, council sent the minister a letter drafted Nov. 13.
“In accordance with municipal policy, each company on the attached (oil and gas companies tax arrears) list has been provided a property tax notice,” the letter read.
“The Municipal District of Willow Creek No. 26 requests the Minister of Energy and Minerals employ all available tools to aid the municipality in the tax collection.”
Jean in his letter cautioned that any additional processes that are additive to Ministerial Order 043/2023 may place companies at an increased risk of bankruptcy.
“This in turn would increase the risk of assets going to the Orphan Well Association which is not required to pay municipal taxes,” Jean noted.
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