“Nothing is certain except taxes and death” is an often repeated quip among Albertans. The quote originated from scientist, inventor, statesman, and diplomat Benjamin Franklin in 1789 but is now seen as a universal truth.
Few of us can escape paying our taxes, lest CRA or the provincial government comes a-knockin’.
That is unless you are an Oil and Gas company in Alberta.
According to the Rural Municipalities of Alberta (RMA), as of Jan.1, 2024, oil and gas companies owed more than $250 million in unpaid municipal property taxes.
Last year alone, these tax-delinquent companies stiffed Alberta communities with $43 million in unpaid taxes while making record profits.
Rocky View County, just northeast of Calgary, is one of the municipalities getting frustrated by tax-evading oil and gas companies and the provincial government’s letting them get away with it.
Paul McLauchlin, President of the Rural Municipalities of Alberta, says the Alberta Energy Regulator (AER) is too soft on these tax evaders.
“While all other property owners in the province face strict penalties for non-payment of property taxes, oil and gas companies continue to exploit legislative and policy loopholes and hide behind an industry regulator that has, for many years, refused to hold some companies accountable for poor business decisions, high liability risks, and a lack of concern for the public interest,” McLauchlin said, in a media release. “I’ll be blunt. Rural municipalities and all other companies and individuals paying property taxes are being used.”
Special Treatment for Big Corporations?
People like Ben Franklin, a US Founding Father, and even the Fab Four, The Beatles, feared the taxman. So do most ordinary Albertan home and business owners, but oil and gas companies don’t.
This is probably because delinquent oil and gas companies don’t seem to get in trouble when they stiff communities by not paying their property taxes.
These unpaid taxes withhold money that tax-strapped, small-town Alberta needs to fill potholes on a main street, keep the lights on at the community centre, and help pay for all the other things that make towns work.
Recent legislation and policies can help municipalities recover unpaid taxes and prohibit Alberta’s Energy Regulator from issuing new licenses to oil and gas companies that owe more than $20,000 in unpaid taxes.
Renato Gandia, a spokesperson for the Regulator, emailed the Globe and Mail to say that “municipalities remain responsible for the collection and enforcement of their municipal taxes.”
Though these regulatory changes are a step in the right direction, the AER still allows so-called “zombies”—companies with no interest in growing—to continue operating while not paying their property tax bills. Simply put, keep your taxes owed to under $20,000, and you are good to go!
“What the AER has allowed a small number of companies to get away with is not in the public interest,” said McLauchlin.
”It harms municipalities, it harms other property owners, and it harms the oil and gas industry. The only group benefitting are these irresponsible companies taking advantage of the AER’s hands-off approach. At the end of the day, we need a regulator, not a cheerleader.”
Walk Away From Wells
McLaughlin believes the AER has backed itself into a corner and that any immediate enforcement of overdue tax payments would prompt many zombie owners to walk away from their wells, declare bankruptcy, and start over with a new company.
“The AER has allowed these companies to operate for such a long time, with such poor financial management, that they are now unequipped to deal with the consequences of them failing,” said McLauchlin.
The Orphan Well Association is responsible for closing, cleaning up and monitoring wells that are no longer viable or have irresponsible ownership.
The number of orphan wells that needed to be closed and cleaned peaked at around 3,200 in 2018-19.
The Association, funded by industry and the province, still has a lot of work to do.
There are now roughly 1,700 toxic well sites to decommission and reclaim, but another 3,800 need reclamation and approximately 3,400 require monitoring and revegetation.
Between orphaned wells and unpaid taxes, the Oil and Gas industry has made huge profits off public resources owned by all Albertans without paying their fair share.
It seems Benjamin Franklin’s ‘law’ applies to everyone except oil and gas in Alberta.
