Municipalities in the Peace Country will have some breathing room for a time over the ongoing discussions regarding potential changes to the Municipal Oil and Gas Tax Assessment Review. Grande Prairie – Wapiti MLA and Minister of Finance Travis Toews says it’s important that Albertans understand there’ll be no significant changes on the horizon.
“Certainly for the upcoming year, a decision is imminent. [Minister of Municipal Affairs Tracy] Allard has stated publicly that there won’t be any significant changes for the upcoming year and so I think that’s one thing that Albertans can take to the bank, and Alberta municipalities can take to the bank.”
The proposed new model in question, when first introduced, suggested changes to the way oil and gas facilities, wells, pipelines, and equipment could be assessed. These changes threatened to drastically cut into rural tax revenues, and be cause for significantly increased municipal property taxes
Toews says having engaged with concerned municipal leaders and stakeholders, the review is still firmly in the consultation phase.
He adds the issue is one that is incredibly complex and will have a “great effect and a varied effect”, both on subject municipalities as well as industry partners. He also argues the oil and gas industry has experienced a fundamental change, though Alberta’s assessment framework hasn’t been updated in nearly two decades.
“We really believe that it’s an important issue to look into. Right now, broadly, we’re looking at understanding the competitiveness of our business environment in this province. We recognize that economic recovery, economic growth, job creation, all of which will lead to improved fiscal health for the province, is really our number one priority,” he says.
Speaking to numbers, Toews says Alberta’s oil and gas business values [GDP] have dropped from $380 billion in 2008 to $117 billion in 2020. This, he adds, created a disconnect in the real and assessed value of oil and gas properties.
In response, the goal is to make Alberta as competitive a business environment as possible. This includes methods such as expediting the Job Creation Tax Cut, which came into effect on July 1st, as well as ongoing efforts to reduce red tape.
“We need to look at every aspect of our competitiveness, and, in the energy industry, a municipal tax assessment is one of those issues,” says Toews. “This is an issue that municipalities will need to weigh in on vigorously, and they have, and that’s important, and that’s welcome.”
With respect to consultation efforts with municipal leaders, Toews says Allard has been traveling throughout the province to do just that.
“She’s engaged them, heard from them, and I think that will lead to certainly sound decision making in the short term. In the longer term, this will be a difficult issue; it’s going to be an issue where there will be trade-offs,” he adds.
Toews insists a more modern assessment methodology will better reflect realities in the industry.