NEWS PHOTO COLLIN GALLANT Shallow gas wells, such as this City of Medicine Hat well located in Cypress County, could be subject of taxation changes which some rural officials say could greatly affect their revenue.
cgallant@medicinehatnews.com@CollinGallant
Medicine Hat will likely take part in a provincial government program to lower taxes on shallow gas wells and pipelines inside city limits, a council committee decided Tuesday.
The corporate services committee voted to accept a recommendation to pass the needed bylaw to give a $45,000 tax break to three companies, though the largest portion is for the city’s own energy division.
“Essentially we’re the middle men,” said Coun. Darren Hirsch, vice-chair of the finance committee, of the program that essentially gives companies a 35 per cent tax break on some assets, while the province makes up the difference to municipalities.
This summer the province announced it would set aside $23 million for mainly rural municipalities to effectively cancel the educational portion of property tax amounts owed on certain shallow gas assets.
Alberta officials couched it as a way to provide immediate relief to beleaguered owners of the higher cost, lower production legacy wells while a greater review of linear tax assessment is done.
But, to take part, local bylaws are required, which in Medicine Hat’s case will go forward to council this month.
In this case the City of Medicine Hat would forgive a total of $35,500, most of which is for taxes owed by the city’s own gas exploration and production company.
The share would total $22,100 for wells and another $16,750 for pipelines that meet criteria determined in late September by the provincial ministry of Municipal Affairs.
The reduction for Canlin Energy, which two years ago purchased the southern Alberta assets of Centrica, would be about $3,700 on wells and pipeline infrastructure. A $1,900 reduction for New North Resources would also be applied as part of the 35 per cent reduction.
The city’s requirement to remit those taxes to the province would be lowered by an equal amount.
The city energy division is also waiting for other rural municipalities where the city operates wells (particularly Cypress County) to pass similar legislation.
Officials with the city’s gas production company have previously stated the program could provide between $250,000 to $300,000 in property tax refunds from various jurisdictions.
