In Alberta, industry is competitively challenged at a municipal level as a result of substantial property taxes on industry assets relative to other provinces and sectors, a growing tax gap between the non-residential and residential classes, and unsustainable growth in tax rates relative to growth in the assessment base.
The Municipal Governance Act (MGA), is the statute that creates Alberta’s municipalities and gives their councils the responsibility to provide accountable local governance to contribute to the development and maintenance of safe and viable communities, including the role municipalities play in Alberta’s economic prosperity. In 2014, the government embarked on a province-wide consultation process with a view to implementing the first review since 1994.
Based on the results of the consultation process, the government has implemented changes in three waves. On March 16, 2015, the government introduced Bill 20, the Municipal Government Amendment Act. This legislation focused primarily on changes to enhance municipal governance, particularly with regards to transparency and accountability.
On May 31, 2016, the Government of Alberta introduced Bill 21, the Modernized Municipal Government Act (MMGA), and subsequently consulted with Albertans on proposed changes to the MGA. The changes to the MGA have mixed impacts on Alberta’s economic competitiveness.
The series of changes to modernize the MGA included:
- A 5:1 non-residential to residential tax rate ratio cap, with municipalities above the cap not being allowed to increase the non-residential to residential tax rate ratio further
- An authority for municipalities to create subclasses within the non-residential base and charge differential tax rates to the subclasses
These changes provide an opportunity for municipalities to increase non-residential tax rates applied to industrial property, including upstream oil and natural gas properties, up to the cap.
On April 10, 2017, An Act to Strengthen Municipal Government was introduced as the result of further consultation on the changes resulting from Bill 20 and emerging issues. The most important change in Bill 8 for the upstream oil and natural gas industry is the requirement for municipalities with non-residential to residential tax rate ratios to come down to the 5:1 cap over time.
Canada’s upstream oil and natural gas industry continues to monitor the economic competitiveness of Alberta’s municipalities and will continue to work with municipalities and the province to ensure industry can continue to create shared economic prosperity.
Similar to Alberta, Rural Municipalities (RMs) in Saskatchewan place a disproportionate fiscal burden on industrial property, including upstream oil and natural gas property. The government of Saskatchewan is currently undertaking a Review of Industry Financial Contributions to Rural Municipalities (RM), Rural Road Infrastructure and RM Accountability. CAPP has provided a submission to this review based on established public policy principles to help ensure Saskatchewan’s municipal competitiveness.
Canada’s upstream oil and natural gas industry continues to monitor the economic competitiveness of Saskatchewan’s municipalities, and will continue to work with municipalities and the province to ensure industry can continue to create shared economic prosperity.