County feedlot tax survives appeal in Alberta

The per-animal-unit levy is intended to pay for infrastructure in Lethbridge County, but producers say it is unfair

The legality of a per-animal-unit tax imposed primarily on cattle feedlots by Lethbridge County has been upheld in the Alberta Court of Appeals.

The business tax, implemented in 2016, assessed a $2.50 per animal unit levy last year and in 2017, down from the $3 originally imposed. It prompted a legal challenge from nine feedlots, which deemed it discriminatory to confined feeding operations. About 90 percent of funds collected via the tax come from feedlots within the county.

The special tax was deemed legal in Alberta’s Court of Queen’s Bench in 2017 and a subsequent appeal was upheld in the decision rendered Jan. 18, with one of three judges dissenting.

“We’re obviously glad that it’s been upheld. I think that just allows us the opportunity to move forward with making sure that we provide good infrastructure to the residents,” said Lethbridge County Reeve Lorne Hickey.

The tax was imposed to help fund repair and maintenance to rural roads and bridges. Funding available from the federal and provincial governments was insufficient to cover those costs, the county said when it imposed the tax.

“One hundred percent of the tax goes to the infrastructure, whether it’s roads or bridges or whatever. There’s no money goes to general revenues at all,” Hickey said about the tax, dubbed the “head tax” in many county circles.

The appeals court ruling is a disappointment to cattle feeders, said Alberta Cattle Feeders Association president Janice Tranberg.

“We did have a meeting … with the County of Lethbridge and I think that there’s just a bigger disappointment that the county didn’t work better with the cattle feeders and the farmers to try to find a solution,” she said.

“I know that we had worked with them and reached out to them and provided some alternatives that, from our perspective, were more fair and reasonable and they did not appear interested. So I think that’s a big part of the disappointment.”

Tranberg said the latest court decision opens the door for other rural municipalities to impose similar taxes. Given that agricultural operations are already “tax intensive,” especially compared to similar operations in the United States, any new taxes imposed in Alberta will affect competitiveness.

“What we do see, though, is that the current decision is providing this county and other municipalities who are going to be watching, a very broad discretion on how they set taxes, and so our concern really is on the spillover effect,” Tranberg said.

“Will other counties use this when they’re looking at setting their taxes? It could impact not just cattle feeders but other intensive livestock operations or even other industries.”

Al Kemmere, president of Rural Municipalities of Alberta, said that isn’t indicated so far, given the court decision on the appeal was so recently rendered.

“We haven’t got any other municipalities that have expressed interest in doing it, and I think that’s understandable. This is fairly new for rural municipalities to do this,” he said.

“It is my understanding that both the courts and our government have interpreted this as within our act (the Municipal Government Act) and within our authority.… Nobody has shared their intent to do this with us, other than Lethbridge.”

Kemmere said Lethbridge County has readily provided details of its tax plan to the association, as well as information on its challenges with infrastructure funding.

“In Lethbridge they’ve got a unique situation where they don’t have the high level of oil and gas that other municipalities may have, and they’ve got this tremendous ability to grow feed,” Kemmere said.

“But along with that comes a tremendous ability for these type of operations (feedlots) to exist, and reality is these type of operations don’t have a high tax bill, so to speak. The taxes on these type of operations are fairly minimal and that leaves the county in a situation where they need to raise the revenue to look after their infrastructure.”

Tranberg said the feeder association and Alberta Beef Producers are conducting a competitiveness study, and initial results show taxes within Alberta’s cattle industry are higher than those of competitors stateside.

“We can see right now that we are taxed more heavily than our partners, and so it really sends a signal that … do we want to continue to be competitive?” he said.

“Especially right now, in this particular environment, agriculture is pretty darned important to this province and to this country. I think we need to recognize that and help our industry be more competitive.”

A dissenting opinion offered by one of the three judges on the appeal panel in theory opens the door to further litigation, but Tranberg said that will be up to the original litigants and the feeder association board.

“We do want to work with the counties and with the government,” she said.

“We’d like to find solutions to this. We understand that there is a need for support for infrastructure. It’s just important that one industry (isn’t) unfairly targeted over another.”

Lethbridge County is home to “feedlot alley,” the moniker given to the general area where most of Alberta’s millions of cattle are fed.

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