October 26th, 2020

Linear tax changes will mean millions lost in southeast Alberta

By Medicine Hat News on August 20, 2020.

Changes to linear tax assessment could mean a $25-million drop in tax revenue in southeast Alberta next year, according to figures released this week.

The M.D. of Taber announced Monday that based on four possible scenarios for updating the tax code for oilpatch infrastructure, the reduction in annual revenue could be as high as one-quarter its property tax requisition.

“The M.D. of Taber recognizes that the oil and gas industry is critical to rural Alberta … but this is not a one-way street,” reads a statement.

It estimates a decrease of between $3.1 million and $4.1 million in the first year as Alberta Municipal Affairs weighs options to update assessment formulas that industry says are unfair and out of date.

Cypress County has estimated the loss to be $7.8 million, or a 22 per cent decline. The County of Newell says its loss could reach $11.6 million.

The County of Forty Mile has not released a figure.

According to the release from the M.D. of Taber, tax rates in other property classes would have to rise between 25 and 36 per cent to make up the difference.

Earlier this month, Cypress County stated that even if it reduced operational spending by 70 per cent, tax hikes would still be needed to absorb linear tax reduction.

The province launched the review of how oil and gas wells are assessed this year after providing a near one-third break on local taxes, representing the education portion, starting in 2019 to help the flagging sector.

Ministry of Municipal Affairs officials say they are evaluating the initial options and will continue to consult ahead of a final decision, potentially this fall.

The Rural Municipalities Association of Alberta states that the worst-case scenario its members could cumulatively see a $480-million decrease in tax revenue next year.

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