Municipalities were able to breathe a sigh of relief as the province is giving them a break on uncollectable education property taxes on oil and gas properties.
In Alberta, municipalities collect education property taxes on behalf of the province. Oil and gas facilities are taxed until there is an abandoned status on the record of the Alberta Energy Regulator. This means the company could be long gone, however, the municipality is still on the hook for the education amount generated from the property.
The province introduced the Provincial Education Requisition Credit (PERC). This will allow municipalities that have written off municipal property tax for oil and gas facilities to apply for a credit on the education amount.
“I heard loud and clear during my visits to rural communities this summer that they are facing tax recovery challenges. So we made this a priority and worked with the Alberta Association of Municipal Districts and Counties to come up with this solution,” said Shaye Anderson, Minister of Municipal Affairs. “I am proud that we are able to make a difference and support municipalities.”
Reeve of Kneehill County Jerry Wittstock is pleased with the decision.
“Anytime we can’t collect taxes, yet are forced to pay them, it is not good for our county residents, so I think that if the province finally recognizes we can’t collect taxes then we should not have to submit them.
He says the county’s bottom line has been affected by the slowdown in the oil and gas industry starting in 2014-15.
“We’ve always had uncollectable taxes, but when the oil price dropped the juniors really took a hit and went bankrupt. We weren’t really able to collect our linear portion or education portion,” said Wittstock.
The PERC will be retroactive to 2015, when oil process began to fall, and it will operate until 2019. It will only apply to oil and gas properties, and not any other uncollectible property taxes or senior housing requisitions.
"Having to pay education tax to the government that couldn’t be collected has created significant financial challenges for our members. With the government’s support, municipalities can now focus on other matters, as we look forward to the long-term solution to this issue,” said Al Kemmere, president of the Alberta Association of Municipal Districts and Counties.
The cost estimates of the program will be determined once applications have been received from municipalities in the first intake covering 2015-2017. The program will be capped at $10 million per year.
The first deadline for application is January 15, 2018.
