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Rural governments out tax revenue from struggling resource sector

The impact of low oil prices and a sluggish economy in Alberta continues to spread. The organization representing Alberta’s 69 rural governments says some resource companies aren’t paying their taxes.

Insolvent resource companies walk away from tax bills

Some resource companies are not paying their taxes — which means ratepayers and other businesses could get hit. (CBC News)

The impact of low oil prices and a sluggish economy in Alberta continues to spread.

The organization representing Alberta's 69 rural governments says some resource companies aren't paying their taxes.

Alberta Association of Municipal Districts and Counties (AAMDC) president Al Kemmere says rural municipalities are out hundred of thousands of dollars in missed payments from resource companies that are insolvent, or that just walk away.

"The cash gets tough and the taxes become an item that just don't get paid," said Kemmere, who has noticed the practice building over the past five years.  

He doesn't have an overall figure, but in Kemmere's own county of Mountain View north of Calgary, there is at least $300,000 outstanding from resource companies. He says the county of Stettler is taking legal action to seize the assets of a resource company that owes about $500,000.

Ratepayers, other businesses 'getting hit'

"It starts to be real money after a while," said Kimmere, whose county has sent a letter to Finance Minister Joe Ceci, asking the province to adjust its education/property tax bill to reflect delinquent payments from resource companies.

Kemmere says ratepayers and other businesses are saddled with making up the difference.

Al Kemmere, president of the AAMDC, says his own county is owed $300,000 from resource companies. (Twitter)

"We are passing it on to non-oil-and-gas people when we have to increase the mill rate to adjust for it. So those who are not directly involved are getting hit," he said. "We operate and work on the same land. And if we can do it without having these challenges, it would make life a lot simpler. But it does create issues as far as building good strong relationships."

The shortchanging by some resource operators is also hitting landowners.

Already, 2016 is on track to see a record number of applications from landowners seeking compensation from missed land lease cheques.

The Alberta Surface Rights Board (SRB) says this year alone, it has received four times the number of applications compared to a typical year.

As of Aug. 3, there were 780 applications opened by landowners who weren't being paid, and another 400 applications are in a backlog waiting to be processed, according to SRB chair Gerald Hawranik.

Typically, if the SRB can't get the resource company to pay up, the bill is forwarded to the Alberta government.

Hawranik predicts this year, the Alberta government could find itself paying substantially more compensation than it has in the past — as much as $4 million.

And according to Hawranik, it's not only the small operators with 10 or 20 wells that aren't paying.                    

This year "is the first time we've seen that jump from a small operator to one that's relatively mid-sized," he said.

The board has already received 400 applications from landowners in Alberta seeking payment from one mid-sized operator. Hawranik expects that with 1,500 sites, there will likely be more.


 

About the Author

Kim Trynacity is an award-winning journalist and CBC Alberta's provincial affairs reporter. You can reach Kim by email at kim.trynacity@cbc.ca or on Twitter @ledgewatcher

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