Alta. provides tax relief for abandoned wells

The Alberta government is set to provide rural communities with tax relief after officials announced today they’re launching a new program that deals with defunct oil and gas properties.

The program, called called the Provincial Education Requisition Credit (PERC), will have funding of up to $10 million annually for municipal districts and counties to access. 

The funding is to be solely used for oil and gas properties that have been abandoned since 2015 and that have had their municipal taxes written off since that year.

Many companies abandoned oil wells following the oil crash in 2014 and haven’t been paying rural municipal or provincial taxes on them.

Despite this, rural districts have been picking up the province’s tax tab. They’re required by law to collect the province’s portion of the tax and then return it to the government.

However, rural districts have been pulling from their own coffers to pay and meet the province’s requirements if there are no provincial taxes to collect.

The Provincial Education Requisition Credit (PERC), will have funding of up to $10 million annually for municipal districts and counties to access. The funding is to be solely used for oil and gas properties that have been abandoned since 2015 and that have had their municipal taxes written off since that year. | File photo

Al Kemmere, president of the Alberta Association of Municipal Districts and Counties, said this has prompted many communities to consider raising taxes or cutting services.

He said this tax relief is a big deal for communities, some of which have been facing shortfalls of $400,000.

“The magnitude of this depends on the activity that takes place in the municipality over the years,” Kemmere said during a news conference following the AAMDC’s annual convention.

“The big challenge, and that’s where I have to give government credit, is they recognize this is an item we couldn’t collect and that we would have to take out of our regular budget.”

Municipal Affairs Minister Shaye Anderson said the funds for this program will come from the Alberta School Foundation Fund. All education taxes from the province go to that fund, and it’s used for emergency purposes.

He said this has been a long-standing issue with rural Albertans.

“It’s been out there for a long time, even through our boom or even our own good times, but it really was exacerbated by the falling oil prices,” he told reporters following his speech at the convention.

“A lot of companies were not able to be viable, and unfortunately that really hit the rural municipalities hard,” he said

Municipal districts and counties can apply for this funding online at municipalaffairs.alberta.ca, and the first deadline for applications is January 15, 2018.

The program will operate for five years until 2019. In the meantime, the government is working on a long-term solution to deal with this issue.

Kemmere said he doesn’t yet have an answer on what he’d like a long-term solution to look like but would first like the industry to stabilize before going forward on something longer term.

“I think we’ve been struggling with this hot issue right now,” he said.

“Once things settle out, we should see what we can get for a solution that fits in that.”

Anderson emphasized in his speech that the government is focusing on building relationships with rural Albertans.

It’s a relationship that hasn’t always been amicable.

Things reached a boiling point in 2015 when the province introduced legislation that required non-family farms to obtain occupational health and safety coverage. The bill was poorly communicated, as the rules were initially thought to apply to family farms.

However, Anderson told reporters it hasn’t been a struggle for the government to connect with rural communities over the last couple of years.

“I think that’s a perception out there, and that’s something we want to dispel very much,” he said.

“We’ve got a great relationship with AAMDC.”

He said he’s made a considerable effort to get out of the legislature and chat with rural Albertans.

“I’m an old school guy and personal relationships are extremely important,” he said.

“A lot of ministers got out, and that was to make sure there was no miscommunication out there.”

Kemmere said the AAMDC’s relationship with the government has been improving.

“I’ve got a tremendous relationship with government,” he said.

“We’re seeing government more and more in our communities over time.”

As well, he said, many inexperienced MLAs were elected, so the AAMDC had to help inform them of how rural municipalities operate.

“I think their doors have been open to us,” he said.

“Is it perfect? No. It never has been perfect, and it never will be perfect, but I think we’ve come a long ways in two and a- half years to have these relationships so that we can work together.”

Contact jeremy.simes@producer.com

About the author

Comments

explore

Stories from our other publications