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(CHAT News Today)
'We gave them possible solutions'

County reeves continue voicing concerns over oil & gas tax breaks

Aug 6, 2020 | 1:07 PM

More municipalities in rural Alberta are chiming in after it was revealed last week that the province is considering significant tax breaks for oil & gas companies.

The breaks would effectively relieve companies of property taxes they owe to municipalities.

RELATED: Counties warn of “disastrous consequences” if province approves oil & gas tax breaks

Leaders from Red Deer County and Lacombe County told rdnewsNOW on July 31 that their municipalities stand to lose hundreds of millions of dollars, or else be forced to heftily hike residential and commercial taxes.

Reeves in Brazeau County and Starland County said the proposal could be disastrous for rural Alberta, perhaps even causing some municipalities to go belly up.

“The County of Stettler fully supports the oil and gas industry and a review,” said Reeve Larry Clarke on Wednesday. “But the proposed solution does not match the problem. Large oil and gas companies are set to benefit from the four scenarios presented with no guarantees money will be reinvested in Alberta. Struggling small to mid-sized oil and gas companies – the ones that live, work and support our communities, may actually see tax increases if any of these proposals are pushed through. The four scenarios being considered would be disastrous for our communities and for our rural way of life.”

In a release, the County of Stettler notes it wrote off $4.5 million in bad debts last year, mainly from oil & gas. In 2020, they’ve already written off another $2.7 million.

“We asked the Minister of Municipal Affairs to assist us over a year ago, when suddenly our ability to collect on bad debts from oil and gas was taken away – and we gave them possible solutions,” Clarke continues.

‘We have still received no solution or assistance from our government, and yet they are chipping – or digging – away at County revenue’s further, not actually assisting the companies struggling to survive. To put things in perspective, this proposal gives oil and gas companies with $500 million in assets a tax cut on the backs of a rural municipality with an operating budget of $24 million.”

Woodlands County estimates it could lose $3.1 million, or 14 per cent of tax revenue, in 2021 if the worst case scenario occurs.

“The provincial government’s argument that they are reducing taxation to make companies more viable, is flawed. Two companies in our municipality failed to pay 100 per cent of their municipal taxes to Woodlands County, and they are still going broke,” wrote Mayor John Burrows on Thursday.

“Furthermore, the Alberta Energy Regulator is continuing to approve companies that have not paid taxes, the ability to acquire more assets. Woodlands County Council has no confidence that a company that cannot make money with its current assets, and therefore cannot afford to pay its taxes, can afford to purchase more assets with the blessing of the Government of Alberta. There is a point when companies have reached their end.”

In information posted to its website, Yellowhead County says it’s looking at up to a 21 per cent reduction in oil & gas property tax revenue.

It cites a lack of transparency during meetings leading up to this announcement, a short timeline to respond, and lack of communication from the provincial government as flaws in the process.

“Unfortunately, this process will result in significant loss of revenue for Yellowhead County and the tax burden will simply be shifted away from the oil and gas industry and on to all other businesses and residents,” one paragraph reads.

It gives two daunting scenarios to mitigate the losses, which include increasing the residential tax rate between 16.3 and 350 per cent, and the non-residential tax rate between 1.3 and 36.5 per cent.

Each of the municipalities strongly encourage residents to express their concerns to local MLAs.

The province is expected to make a final decision by the end of the month.