Rural communities want end to oil and gas property tax loopholes

A leaked confidential document shows the province could have taxpayers clean up abandoned oil and gas wells—that could cost billions.

Rural Municipalities of Alberta (RMA) says its members are facing an unpaid oil and gas property tax burden of $253.9 million.

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As new arrears are added each year, the chance of recovering these unpaid millions is shrinking and municipalities are calling on the province to fix well-known loopholes that let debtor companies off the hook.

In 2024, the unpaid oil and gas property taxes owed to rural municipalities grew by $67.8 million, more than 50 per cent higher than the outstanding taxes owed in 2023, according to a survey of RMA members.

The portion of this debt owed by insolvent companies is now more than 60 per cent, leaving municipalities with little choice but to accept their losses and write off the debt.

“When these companies are put up for sale or transferred, there is no opportunity for municipalities to attach that unpaid property tax portion to the resale or to try and get any of the value back,” said RMA President Kara Westerlund.

“There is no mechanism, whether legislation or within the (Alberta Energy Regulator), that allows us to be a creditor.”

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The fact that municipalities are powerless to compel tax payment is well known within the oil and gas industry, Westerlund said.

The recent spike in the number of insolvent companies suggests several non-viable companies continued operating and not paying taxes in 2023 before going under last year, according to RMA.

The growing issue of insolvency highlights the need for the AER to “adopt a more effective approach to ensure that the oil and gas industry meets its tax obligations to municipalities while still operating,” the RMA said in a 2024 report on unpaid oil and gas taxes.

Rural municipalities are owed over $100 million by operational companies.

Though hundreds of oil and gas companies currently have unpaid property taxes, a handful of bad actors are responsible for a huge portion of the debt. The ten worst offenders owe a combined $67 million, and a single company owes over $27 million to 19 municipalities.

“The attempts in the last several years to put a stop to this type of behaviour in the industry are not working. RMA is willing to work through the solutions. We’re willing to come to the table. But enough is enough,” Westerlund said.

Westerlund said RMA is hoping to meet with officials from municipal affairs and energy and minerals to create a property tax accountability strategy and implement solutions to strengthen enforcement and eliminate the unpaid property tax problem.

By Brett McKay, Local Journalism Initiative Reporter, St. Albert Gazette