Westlock County council voted to write off $570,881 worth of uncollected oil and gas taxes from insolvent or bankrupt companies at its May 13 meeting.
The five companies whose taxes are being written off owe anywhere between $38,000 to over $200,000 each.
An allowance has been in place for what the county calls ‘doubtful accounts’ to cover potential tax write-offs. The account holds over $900,000, enough to cover the 2024 uncollected oil and gas tax from those five companies.
The total outstanding tax on the County's books is just under $2.3 million, with 47 per cent of that attributed to oil and gas companies.
Municipalities across Alberta have a combined total of $253.9 million in local taxes that has gone unpaid from the industry alone, as of 2024. This is a big problem that has been on the Rural Municipalities of Alberta’s (RMA) radar for the past seven years, but has been around for far longer.
One problem the province seems to face is companies stating they are bankrupt and then set up shop somewhere else to avoid paying property taxes. Kara Westerlund, president of the RMA, said: “In some cases, we’re seeing and hearing that because it’s based on the company name” and not the people behind the company.
Westerlund shined a light on the consequences for residential properties not being paid versus that of companies in the oil and gas industry.
“Obviously the government comes in and they seize your property. You do not have legislation or regulations that allow us to do that to specifically oil and gas companies. "
Due to the large amount of unpaid taxes that the municipalities must make up for, they are having to make changes to their property tax to sustain their doubtful account, Westerlund said. “Residents are having to pay more to pick up the companies out there that choose not to pay and continue to operate in those ones that have become insolvent.”
Like Westlock County, many municipalities have a doubtful accounts fund that can be used to cover the property taxes. However, there is nothing from the provincial or federal government that can be used to subsidize this growing problem.
“The problem is at the end of the day somebody still has to pick up that portion and it’s everyday taxpayers that are on the hook for that.” says Westerlund.
The RMA has been adamant in getting this issue seen and heard by the provincial government, specifically the Energy Ministry and the Alberta Energy Regulator. One of their suggestions has been to put regulations in that says “if you don’t pay your taxes, your operator license cannot be transferred.”
It was confirmed back in the fall of 2024 that the Municipal Affairs Office, the Energy Office and the RMA will form a task force to find a solution. They are finishing up their terms of reference but are hoping to have a solution and legislation presented by this fall.
One thing Westerlund says is that everyone can support the legislation by contacting your MLA “because you and I are picking up what the oil and gas companies are not paying.”
