Municipalities protest oil and gas tax

Municipalities including Northern Sunrise County, MD of Smoky River, and more from across the province rally at the Legislature July 30 to protest proposed changes to oil and gas tax rates. Photo courtesy of Cindy Millar at Northern Sunrise County.

Susan Thompson
South Peace News

The provincial government’s proposal to stimulate the struggling oil and gas industry by lowering their municipal property taxes has municipalities across the province raising the alarm.

Municipal officials and councillors gathered for a protest against the changes to oil and gas taxation at the Legislature July 30.

Councils and the Rural Municipalities of Alberta (RMA) say the changes to the assessment model will mean they have to either raise property taxes on everyone else, or cut their services.

The province has provided four different scenarios after a review of how oil and gas companies are taxed by a panel made up of industry and government representatives. The four scenarios look at different factors including asset depreciation, base costs, land assessment and other adjustments, because the current assessment system only looks at replacement cost and not market value.

The RMA says most municipalities will have to raise their property taxes on everyone else by 50 per cent if the changes go through, and even more if they rely heavily on oil and gas revenue.

The province and Peace River MLA Dan Williams say no final decisions have been made yet.

The MD of Smoky River No. 130 had two councillors representing the municipality at the Legislature.

“The protest to the industrial assessment review is the initial statement to the minister,” says CAO Rita Therriault.

Therriault says there are still many unknown factors at this point.

“Council will look at the Province’s decision once it is in effect,” she says.

But Northern Sunrise County Reeve Carolyn Kolebaba says the changes will put municipalities in dire financial straits.

“Smaller municipalities will be broke very quickly, and if we absorb them we will eventually fall too,” Kolebaba says.

Northern Sunrise County says based on the options presented by the province, they may lose 17 per cent of their total revenue, or between $2.7 million to $6.3 million in lost revenue in the first year and more in following years.

Northern Sunrise relies heavily on oil revenue, and has already been struggling to get oil and gas companies to pay their property taxes.

If the changes go ahead, the county will have to decide if their residential mill rate will be increased somewhere between 223.4 per cent up to a whopping 512.1 per cent; if the non-residential mill rate is increased between 11.6 to 31.3 per cent; if the county’s workforce will be cut by 37.7 up to 86.4 per cent in a devastating loss of staff and services; or some combination of all three.

Some on social media have called those numbers “fearmongering” or asked if they are a typo. Kolebaba says she is referring to numbers showing how the changes will affect every community across the province. The RMA has created a report showing those impacts.

“This is the truth the government doesn’t want you to know,” Reeve Kolebaba says.

Kolebaba says if the county loses out on revenue from the proposed changes, so will seniors lodges and education in Peace River and Nampa, as well as charities and others who rely on county dollars.

“If towns and cities think they’re not hurt by this, they are going to be,” she says. “We won’t be building another medical clinic. We won’t be building anymore rec centres. There’s no way. The money just will not be there.”

Kolebaba says the protest at the Legislature was organized to let the provincial government know the options are unacceptable and the way the planning has been done is unacceptable. She doesn’t feel municipalities were properly consulted and finds the way the province has conducted the process “sneaky.”

She says the process was done “behind closed doors,” and only administration staff from some municipalities were able to participate in the technical panel looking at how to implement the changes. Administrative staff don’t set policy, but are directed by councils.

Municipal councils, who have already set their tax rates for the year, were only officially informed of the changes on or around July 23.

Kolebaba also points out the current government was elected with the help of rural areas.

“How can you treat the people who backed you this way?” she says.

Kolebaba says municipalities like hers have done everything the province has asked of them so far, from completing intermunicipal agreements to taking on the costs of policing, despite the expense. But she says changing linear assessment is going too far, especially with no guarantees money and business will stay in Alberta.

“Where is the win here? There is no win,” Kolebaba says.

She says the only beneficiary is the Canadian Association of Petroleum Producers (CAPP), and the changes will hurt small oil and has businesses.

The CAPP maintains counties will see increased revenue and fewer oil company bankruptcies through the changes.

But Kolebaba says while industry is the county’s friend, the CAPP isn’t.

“I have lost trust,” Kolebaba says.

Besides attending the protest, Northern Sunrise has sent a letter to their ratepayers asking them to contact their MLA. Kolebaba says she hopes if enough people speak up, the Premier will notice.

“I’m hoping Premier Kenney is on our side and will stop this nonsense,” Kolebaba says.

Kolebaba says three opposition NDP MLAs were present at the protest but she did not see any government MLAs.

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