By Alex McCuaig

Linear tax

Rural municipalities to pay the price for provincial tax cut on gas wells

Dec 20, 2019 | 5:05 PM

Medicine Hat, AB – Rural municipalities are likely going to bear the brunt of the provincial government’s announcement Thursday of a 35 per cent reduction in tax assessments on shallow gas wells.

“It was a huge surprise to all of us involved,” said Molly Douglass, Reeve of Newell County, of the move by the provincial government.

The impact will be substantial to Cypress County and the County of Newell who have the highest and second highest amount of eligible wells respectively, with millions of dollars at stake of being evaporated from rural municipal budgets in southeastern Alberta.

In a release issued Thursday, the Alberta government stated its 2020 program for relief to natural gas producers “mirrors similar assistance provided in 2019.”

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However, that reflection is missing the critical tax reimbursement provided by the province to rural municipalities through collection of the education portion of assessments this year.

Douglass says this will result in a few million of dollars less of tax revenue coming into Newell County.

“So, we have to make adjustments for that and the province doesn’t want us to – they have been very outspoken about keeping municipal local taxes down but at the same time, they are taking away some of our revenue.”

For Reeve Dan Hamilton, it’s too early to say what the impacts to Cypress County will be after learning about the move on Thursday.

“With what little information we have right now, I really can’t answer that for you right now. We are looking forward to having more dialogue with the province and the companies that are involved,” said Hamilton.

The province says the move is part of restructuring the assessment process developed in 2005 and, for now at least, municipalities are going to need to adapt while the system is being updated.

That new assessment system is expected to be completed by the 2021 tax year.