By Alex McCuaig

Gas well tax cut

Provincial tax relief program to cost Cypress County millions

Jan 23, 2020 | 5:14 PM

Medicine Hat, AB – The move by the province to cut tax assessments on shallow gas wells will likely cost Cypress County $3 million dollars in 2020.

The province announced last month a move which extended tax relief to shallow gas producers through 2020. However, while the 15 rural municipalities affected received a rebate from the province for the same cut last year, they won’t be this year.

The provincial decision will have an oversized impact on Cypress County which has about 30 per cent of Alberta’s 70,000 wells and pipeline properties affected but, due to having already one of the lowest assessment rates, only collects eight per cent of the tax revenue on shallow gas wells province wide.

Brooks-Medicine Hat MLA Michaela Glasgo told CHAT News earlier this week the decision to cut taxes on shallow gas producers came at the request of industry but she is in touch with municipalities in the riding about the situation.

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“The counties have reached out to me and I will be continuing to consult with them,” said Glasgo earlier this week.

She said the municipal tax reduction ordered by the province, “came from the natural gas community – from that industry specifically – so we are listening to industry on this and we will be working with our municipal partners going forward.”

When the province announced the initial shallow gas tax relief program last July, a subsequent meeting was held in Three Hills in August 2019 among officials from Municipal Affairs and the affected rural municipalities.

During that meeting, municipal representatives discussed the consequences of not participating with the provincial program with Municipal Affairs representatives indicating, “that was not an option,” according to the County of Newell council minutes.

Those County of Newell meeting minutes also indicated it wasn’t clear what the ramifications of not participating in the provincial program would be.

NDP shadow finance critic Shannon Phillips says the impact will likely trickle down to other ratepayers in the rural municipalities.

“Rural municipalities are going to have to take that foregone tax revenue and put it somewhere,” said Phillips. “You know where it is going to go – on people’s residential property taxes and on to other businesses.”

It’s part of a larger set of funding pressures put on rural municipalities, said Phillips, and, “challenges coming as a result of Jason Kenney’s government’s decisions.”

Cypress County Reeve Dan Hamilton said it’s too early too judge the full impact of the move.

“I know council has definitely looked at where we are going and what we are doing,” said Hamilton. “We’re trying to maintain the same service that we’ve always given ratepayers and that’s our focus.”

According to the province, the move in part is due to an antiquated formula to assess shallow gas wells developed near the height of the natural gas boom.

The province says it is developing a new assessment formula.