After months of uncertainty for rural municipalities in Alberta over the province’s proposed changes to the oil and gas assessment model, the UCP government has announced that it will hold off on assessment changes for now.
The province announced Monday that it will give needed support to the oil and gas industry by exempting energy companies for three years from property taxes if they drill new wells or build new pipelines. The government will also eliminate the Well Drilling Equipment Tax provincewide for new drills, which was a one-time well drilling equipment tax that companies paid based on the depth of the well.
Additionally, the government will also lower assessments for less productive oil and gas wells while continuing with the formerly introduced 35% assessment reduction on shallow gas wells for three years.
The province says that between January and August of 2020, there were 1,547 wells drilled in Alberta. That is a decrease from 3,069 wells drilled in 2019, and 4,173 wells drilled in 2018.
” We are acting now to encourage new oil and gas development that will create jobs and boost Alberta’s recovery,” said Minister of Municipal Affairs, Tracy Allard. “Alberta needs to be as competitive as possible to attract investment into our communities. We know our municipal partners are committed to doing their part to create jobs and support Albertans through this challenging economic time. We are working to secure a brighter future for our province by supporting both industry and communities.”
Al Kemmere, President of Rural Municipalities of Alberta says, “This announcement reflects an effort to achieve a fair balance between enhancing oil and gas industry competitiveness and supporting municipal viability. RMA appreciates the efforts of Minister Allard to reach out to municipalities to better understand how important the current assessment model is to supporting municipal infrastructure and operations, and the efforts of the entire Government of Alberta caucus in supporting these short-term initiatives. RMA looks forward to working with the Government of Alberta and industry in the coming years to ensure that rural municipalities can address their viability and continue to do their part to support industry competitiveness in a way that reflects a strong partnership.”
In the coming months, the government will be developing a plan for longer-term reviews of the regulated assessment system, which hasn’t been updated since 2005, and continue to consult with municipalities and the energy industry.
In July, the province proposed four scenarios that rural municipalities said if implemented, they stood to lose millions of dollars in tax revenue that would severely impact their budgets. Local counties including Woodlands County, Yellowhead County, and Lac Ste. Anne County, as well as the Municipal District of Greenview, all strongly opposed the changes and voiced their concerns with the scenarios presented.
In Monday’s decision, the UCP said they realize that now is not the time to make comprehensive changes to the assessment model. They say these new measures are to provide much-needed certainty to industry, investors, municipalities, and other taxpayers now and into the future.