7/3/2019 Tax relief for industry and municipalities | .ca

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Home → Government → Connect with government → Government news Jul 02, 2019 Media inquiries

Tax relief for industry and municipalities

The Government of Alberta is acting swiftly to provide urgent, timely tax relief for shallow gas producers in dire straits.

Minister Madu meets with members from the Rural Municipalities Association. https://www.alberta.ca/release.cfm?xID=64153113C7409-B1B8-35F3-9048DCF30ED6A29A#toc-1 1/3 7/3/2019 Tax relief for industry and municipalities | Alberta.ca

Economic mismanagement from the previous administration combined with low commodity prices have left natural gas producers on the brink of bankruptcy. As part of government’s overall action plan, immediate steps will be taken to work with municipalities to reduce 2019 taxes on shallow gas wells and pipelines. Shallow gas producers will receive more than $23 million in total support extended from this tax relief.

“You can’t tax business into bankruptcy. Unlike the previous government, which sat on its hands, our government is taking swift action to support shallow gas producers, protect municipalities and ensure a fair assessment model is in place for wells and pipelines. This initiative will prevent further company failures and job losses in our province, as we saw recently with Trident Exploration, while creating a more viable system for industry and government.”

Kaycee Madu, Minister of Municipal Affairs

While property taxes go to municipalities, the assessment model for linear property such as pipelines is determined by the province. The model has not been updated since 2005, despite tremendous changes in the natural gas sector.

“Alberta’s natural gas industry has been hurting for years due to extreme low prices, inaction by previous administrations and an outdated property tax model. Our government committed to protecting Alberta’s natural gas industry and this measure is a tangible solution that will provide much-needed, short-term relief to our producers. We will continue to bring all stakeholders to the table to find collaborative solutions on this critical issue.”

Dale Nally, Associate Minister of Natural Gas

Municipal Affairs will soon provide a list of affected wells to municipalities and companies.

“We recognize that municipal and education property taxes are not the core cause of the industry’s struggle, but are likely the only area in which short-term relief can be found, so we’re pleased with the Government of Alberta’s announcement, as it helps the shallow gas industry without unfairly penalizing rural municipalities. That said, in the long term, property tax should not be seen as a tool for relief.”

Al Kemmere, president, Rural Municipalities of Alberta

When these companies go bankrupt, it’s not just the employees who suffer – leaseholders, local communities and provincial revenues are all affected. This initiative makes it clear that Alberta’s new government is focused on removing barriers to the success of the energy sector.

“This announcement is much-needed, positive news for Alberta’s natural gas sector, and for all Albertans. Rapid and decisive leadership from this government on the natural gas file is a demonstration of their commitment to protect Alberta jobs and we welcome this measure.”

Tristan Goodman, president and CEO, Explorers and Producers Association of https://www.alberta.ca/release.cfm?xID=64153113C7409-B1B8-35F3-9048DCF30ED6A29A#toc-1 2/3 7/3/2019 Tax relief for industry and municipalities | Alberta.ca Quick facts

About 65,000 wells qualify. The wells are predominantly found in 15 municipalities. Municipalities will continue to collect the remainder of property taxes from shallow gas companies, which go directly into their local budgets. This decision addresses fixed costs as referenced in the Natural Gas Advisory Panel’s Roadmap to Recovery report. Related information

Shallow gas tax relief

Media inquiries

Tim Gerwing 587-598-1593

Press Secretary, Municipal Affairs

© 2019 Government of Alberta

https://www.alberta.ca/release.cfm?xID=64153113C7409-B1B8-35F3-9048DCF30ED6A29A#toc-1 3/3 7/3/2019 Shallow gas tax relief | Alberta.ca

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Home → Housing and community → Housing and property → Property tax and utilities → Property tax → Shallow gas tax relief Shallow gas tax relief

Provides industrial property tax relief to shallow gas producers affected by low market prices and protects municipalities from lost revenue. Overview

Industrial property tax on shallow gas wells and pipelines will be reduced by 35% for the 2019 tax year.

This short-term relief will help shallow gas producers cut costs, protect jobs and remain competitive while dealing with economic pressures facing the natural gas industry.

To ensure municipalities don’t suffer from lost revenue, the province will reduce the amount of education property tax they pay to the government.

About 65,000 wells will receive more than $23 million in total support. Why it’s needed

Many shallow gas producers are in a precarious financial situation as a result of low market prices and high operating costs. Urgent property tax relief is required to avoid:

further company failures job losses impacts on communities abandonment of reclamation liabilities How it works

https://www.alberta.ca/shallow-gas-tax-relief.aspx 1/2 7/3/2019 Shallow gas tax relief | Alberta.ca The government worked with the Explorers and Producers Association of Canada to determine which companies would benefit the most from this tax relief.

A list of qualifying shallow gas wells will be provided to affected municipalities and companies.

Municipalities will then have to:

pass a bylaw to implement the tax relief program report natural gas pipelines related to qualifying wells report the total amount of tax cancellation to Municipal Affairs continue to collect property taxes from shallow gas producers that go directly into their local budgets

The wells are predominantly found in 15 municipalities:

Cypress County Wheatland County County of Stettler No. 6 County of Forty Mile No. 8 Next steps

While property taxes go to municipalities, the assessment model for linear property such as pipelines is determined by the province. The model has not been updated since 2005, despite tremendous changes in the natural gas sector.

This decision addresses fixed costs as referenced in the Natural Gas Advisory Panel’s Roadmap to Recovery report.

© 2019 Government of Alberta

https://www.alberta.ca/shallow-gas-tax-relief.aspx 2/2