By Chris Brown

Balance for energy industry, municipalities

Province offers tax exemption on new wells, pipelines

Oct 19, 2020 | 12:37 PM

Alberta is exempting energy companies from paying property taxes on new wells and pipelines for three years as it attempts to strike a balance between industry and municipalities on linear tax assessments.

“Municipalities need a strong oil and gas industry to create jobs for residents, the energy industry needs municipalities to create communities so their workers can live, raise a family and enjoy a healthy quality of life,” said Municipal Affairs Minister Tracy Allard.

The Well Drilling Equipment Tax will also be eliminated and assessments will be lowered for less productive oil and gas fields to keep them viable.

The property tax exemption will be reflected in the 2021 assessed values and applied for taxation in 2022, 2023 and 2024.

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In July, the province released four potential scenarios for its new assessment schedule. Municipalities would have seen losses of between seven and 20 per cent in tax revenue under the plans and urged the province to reconsider.

In August, Cypress County Reeve Dan Hamilton said the county would lose close to $8 million if the province went ahead with any of the four initial proposals. At that time the county projected residential taxes to increase 132.2 per cent to 181.1 per cent, business and industrial taxes could increase by 39.9 per cent to 63.3 per cent, and farmland taxes, according to the county could see a rate increase by as much as 1,550 per cent.

Allard said municipalities have told her they are willing to be partners and she expects them to do all they can to avoid increases to ratepayers.

READ MORE: Area reeve seeks balance on oil and gas tax assessment changes

Al Kemmere, president of Rural Municipalities of Alberta, said his group supports the decision in its current form, calling it a much-modified approach to dealing with the challenges faced.

He added his members will struggle with the incentives announced for industry but says he’s confident they will be willing to come forward to try to do their part for the economy.

But the deal leaves unresolved the issue of rural property taxes that some companies have refused to pay taxes that totalled $173 million by last January.

Kemmere says his group has received no assurances that outstanding tax bills will be paid or that the new lowered rates will be honoured.

The government did not release a price tag for the tax breaks, but a spokesman for the Canadian Association of Petroleum Producers has said they could save industry more than $80 million.

The province hopes the changes announced will spur investment in Alberta

With files from The Canadian Press