Alberta Extends Tax Aid for Shallow Gas Producers
The Canadian province of Alberta said December 19 it would extend a 35% reduction in municipal taxes applied to shallow gas wells and pipelines into the 2020 tax year while it continued its overhaul of the municipal property tax structure.
“Our government recognizes that many of Alberta’s shallow gas producers are continuing to struggle because of market conditions and high operating expenses, including property taxes based on outdated models,” municipal affairs minister Kaycee Madu said. “Until the new assessment models can be implemented, we are providing a 35% per cent property assessment reduction on shallow gas assets for the 2020 tax year.”
The government first announced the program, applicable initially for the 2019 tax year, in July 2019. Madu’s latest announcement provides the same relief for the 2020 tax year.
“Our government has implemented a number of actions that provided much-needed, short-term relief for Alberta’s natural gas producers, and we are now shifting our focus to the long term,” Dale Nally, associate minister for natural gas, said in a statement. “Providing the same property assessment reduction in 2020 as in 2019 will allow us to work with industry to fix Alberta’s assessment model, without having to rush the process.”
With the temporary relief extended, the government will continue to consult with municipalities and industry as it works on changes to the model used to determine the value of assessments, particularly for oil and gas properties. The new model is expected to be put into place in 2021.
“Alberta has historically assessed our industry at a higher level relative to other jurisdictions, which means higher taxes and fewer jobs,” said Tim McMillan, CEO of the Canadian Association of Petroleum Producers, whose members produce about 80% of Canada’s oil and gas. “The province’s relief for shallow gas assets and its leadership in ensuring the 2020 assessment review does not adversely impact industry competitiveness sends a critical signal to the investment community that Alberta is open for business.”