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Energy company must pay its taxes in full

County of Barrhead councillors deny a request to forgive unpaid tax penalties
 Walter Preugschas copy
County of Barrhead Coun. Walter Walter Preugschas suggested during council's May 17 meeting that municipalities should be taking a uniform approach when it comes to dealing with energy companies that ask for forgiveness of property taxes.

BARRHEAD – County of Barrhead councillors denied a request from Long Run Exploration to cancel a portion of the company’s overdue property taxes.

Councillors considered the request at their May 17 meeting.

Long Run Exploration is a private Calgary-based intermediate oil and natural gas company focused on light oil development and exploration in Western Canada.

It is the second such request the county has received from an energy company in the last month. The county also denied a similar request from an energy company that the municipality did not name due to privacy concerns in February 2021.

In April, Axiom Oil and Gas asked that they be able to make a one-time payment of $152,817.59, writing off $27,921.80.

In this case, Long Run Exploration asked the county to forgive close to $45,000 in exchange for a one-time payment of $162,859,92 for outstanding taxes on 27 tax rolls for the 2020 and 2021 tax years. 

County manager Debbie Oyarzun said the amount accounts for the penalties the company incurred for non-payment of taxes.

"Penalties become taxes over time," she said.

Oyarzun noted that Alberta's Municipal Government Act does give municipalities the authority to defer, reduce or cancel taxes "if they deemed it equitable.”

However, she recommended against it.

Oyarzun said the municipality gives residents and businesses who may have difficulty paying their tax bills in full the opportunity to enter into a Tax Instalment Payment Plan (TIPP).

Oyarzun also noted that recently the province introduced Bill 77: Municipal Government (Restoring Tax Accountability) Amendment Act.

The legislation gives municipalities the ability to use special liens to recover unpaid taxes on oil and gas properties. It also placed property tax liability on both the owner and operator of oil and gas assets.

She added the bill was in response to a pair of 2019 court decisions that put municipalities at the bottom of the list, making them unsecured creditors. This meant it was difficult to impossible for them to collect unpaid taxes from energy companies.

She also referred to a statement made by Premier Jason Kenney during the Rural Municipalities of Alberta's most recent convention. "‘You've been very patient. Patient through the tough years when so many companies, especially the mature dry shallow gas producers, were barely able to stay afloat ... but at these commodity prices, there are no more excuses. These companies must pay what they owe, period.’"

It is worth mentioning that Long Run Exploration included a cheque for $152,817.59 with their request but stated not to "cash it" unless the council agreed to forgive the roughly $45,000 in penalties.

"If you accept the proposal, it sets a bit of a precedent when we get any other requests. Plus, you can have those companies which were denied come back and ask how they were any different," Oyarzun said.

Coun. Ron Kleinfeldt said it sounded to him like Long Run was implying that it was an all-or-nothing deal.

"Are they hinting that if we deny this that they are not going to pay?" he asked. "They have the money. Otherwise, they wouldn't have written the cheque."

Coun. Paul Properzi questioned why Long Run did not want to take advantage of the TIPP.

Oyarzun did not know the answer but said it might just be a case of "if you don't ask, you don't receive.

Reeve Doug Drozd asked when the next penalty deadline was. Oyarzun replied at the end of August.

Coun. Walter Preugschas asked how other municipalities approached the issue.

"It seems to me, that we should all be tackling this the same way, instead of everyone trying to do their own thing," he said.

Oyarzun said how a municipality deals with such requests often depends on the "type of relationship they have with a company".

"(The other factor) is a municipality's ability to absorb the loss," she said. "Since Bill 77 and the change of tone from the province, the majority are saying, ‘No you have to pay.’"

Oyarzun added that not all municipalities have a version of TIPP, which allows companies to make payments without penalties.

"Western Canada Select was at $99, yesterday with the spot price on natural gas was over $7. It is not negatives anymore, there is no reason they shouldn't be paying," reeve Doug Drozd noted.

Barry Kerton, TownandCountryToday.com

 


Barry Kerton

About the Author: Barry Kerton

Barry Kerton is the managing editor of the Barrhead Leader, joining the paper in 2014. He covers news, municipal politics and sports.
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