New Alberta working group to tackle problem of $253M in unpaid oil and gas property taxes

The Alberta government and Rural Municipalities of Alberta (RMA) are forming a working group to try to solve the issue of unpaid property taxes owed by oil and gas companies and collect what has now amounted to at least $253 million.

The Property Tax Accountability Strategy working group was announced by the province in a news release Monday, saying work may include closing loopholes and establishing stronger partnerships and communication between the energy industry, rural municipalities and government.

"Whether you like it or not, you have to pay your taxes. We're committed to working with our municipal partners to ensure that bad actors in the oil and gas industry are held to account, and that municipalities are paid the property taxes they are due," Municipal Affairs Minister Ric McIver said in the release.

The president of RMA, Kara Westerlund, says it's a huge problem resulting in rural communities getting shorted millions of dollars in property taxes that's earmarked for key infrastructure projects.

"I'm not talking about swimming pools or the nice-to-haves; I'm talking about wastewater facilities, culverts, bridges, vital road infrastructure to allow us to get products to market," said Westerlund. 

And she says these aren't just insolvent or bankrupt companies that aren't paying their taxes. She says $100 million of the $253 million owed is from companies that are still operating.

Westerlund says it's not clear if any industry representatives will participate, but she's hopeful there will be.

"We're not talking all of industry, for the most part ... we're talking about a handful that continue to, I guess, to play outside of the rules and not to be good stewards in their communities," said Westerlund.

In an email to CBC News, the office of the minister of energy and minerals says most oil and gas companies pay their municipal taxes, noting about $1.5 billion was paid by energy companies in 2023.

The email from Brian Jean's office also states: "We are looking at every tool to ensure delinquent companies pay their municipal taxes including increasing the consequences for not paying them."

Westerlund says she already has some ideas to pitch to the group, such as suspending operating licenses or not allowing them to be transferred to another business, until taxes are paid.

Other municipal leaders say they agree there needs to be some drastic solutions put forward.

"I've talked to a lot of energy ministers. I've talked to a lot of different premiers. Everybody acknowledged it's been a problem, but everybody's really hesitant to do too much about it,"  said Vulcan County Reeve Jason Schneider.

Issue has persisted for more than a decade

For more than a decade, municipalities have been calling on the province to help them collect unpaid taxes.

Amid a surge in industry insolvencies, RMA has said its members have few ways to hold companies accountable and recoup their losses.

A member survey for RMA, which represents 69 counties and municipal districts, found that, as of Dec. 31, 2024, at least $253.9 million of municipal property taxes have gone unpaid by oil and gas companies.

Rural municipalities were owed $67.8 million in oil and gas property taxes from the 2024 tax year, alone, according to the survey results, up from $42.9 million for the 2023 tax year.

Schneider said Vulcan County, located southeast of Calgary, is due more than $9 million in unpaid taxes. In response to the shortfall, he said services to residents have been cut by 30 per cent.

He says he's cautiously optimistic this working group will deliver results that will hold the offenders accountable

"Because all these Band-Aid solutions we've tried over the last nine years, they really haven't worked. Maybe they've made the problem a little less, but ultimately we still have companies that are operating in this province without paying surface leases and municipal taxes," said Schneider.

Westerlund says she aims to have some concrete plans in place by the next RMA convention in the fall.

In an emailed statement, the president of the Canadian Association of Petroleum Producers (CAPP) said she welcomes the working group and stands on the principle that all companies should be paying their taxes and fees to municipalities. 

"We will continue to work with the province, the Alberta Energy Regulator and municipalities to ensure the measures in place address liability management challenges effectively and maintain Alberta's competitive advantage for investment in energy," said CAPP president Lisa Baiton.