The Energy Minister of Alberta is releasing a Ministerial Order directing the Alberta Energy Regulator to demand that oil and gas companies pay municipal taxes prior to the approval of license transfers or new licenses.
A total of $220 million in unpaid taxes were reported by municipalities in Alberta in 2022, of which $130 million was in tax delays (including penalties and interest) and $90 million was cancellations, according to a survey conducted by the Alberta government.
“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,” said the United Conservative government.
The government estimates that about $76 million of those tax debts are owed by still-active companies, making that amount “potentially recoverable, including through repayment agreements.”
The province claims that $48 million in tax debt will be collected with the help of repayment agreements with municipalities.
In order to approve licence transfers or new licences, the AER must be provided with proof that municipal taxes have been collected, as per the ministerial order issued under the Responsible Energy Development Act.
“While most companies pay their taxes regularly and on time, there are a few delinquent companies that owe overdue property taxes,” said Energy Minister Pete Guthrie. “That is why we’re putting in place this ministerial order – to continue building on our recent work. Our goal is to reduce unpaid taxes throughout the province.”
The UCP government has issued a ministerial order requiring companies wanting to sell their assets to verify that their unpaid municipal taxes do not exceed the permitted level allowed or that they have a repayment agreement in place before applying for new licenses or transferring existing ones.
However, the amount allowed has not been released yet. Alberta claims it will be determined after consulting with municipal affairs and energy and evaluating an AER assessment of existing licensee data related to unpaid municipal tax payments.
“This is the worst ever,” said the president of Rural Municipalities of Alberta, Paul McLauchlin.
The group estimates that energy companies owes $268 million to the towns and cities in which they have facilities. There has been an increase of over 6% from the previous year, and a rise of over 261% since 2018 when the group began recording data.
The UCP government of Alberta has previously informed the AER that it “may” examine factors including tax arrears when deciding whether to approve transfers of energy assets.
“The RMA is pleased to see the province taking action to hold oil and gas companies accountable for paying property taxes,” said McLauchlin on Monday.
“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.”
“As 41 per cent of unpaid taxes are owed by companies that are currently operating, we are optimistic that this change will have an immediate positive impact in rural Alberta.
“We look forward to working with the AER and relevant ministries to determine how our members can support the AER in enforcing this new requirement,” he added.
Original source material for this article taken from here
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