M.D. could lose $1 million in taxes if oil and gas taxed differently

The Municipal District of Willow Creek will lose more than $1 million in tax revenue if proposed changes to the way oil and gas infrastructure are assessed take effect.
Derrick Krizsan, the M.D.’s chief administrative officer, informed council, at their Aug. 12 meeting, what impact those changes will have on the M.D.’s taxes.
“We certainly knew there were some significant changes coming,” he said.
The changes, which remove millions of dollars in assessment, are intended to enhance the viability of the oil and gas industry in Alberta.
Krizsan said the M.D. will lose just over $134 million in assessment which results in a loss of tax revenue of just over $1 million, or $1,034,000 to be exact.
Compounding the tax shift arising, as a result of the proposed assessment model changes, are increasing policing costs, loss of assessment due to annexation, and potential increased costs that may arise due to intermunicipal agreements.
“There’s some significant challenges ahead for municipalities generally,” Krizsan said.
Moreover, these changes will result in increased taxes on farm land and a reduction of services and staff of municipalities in the province.
“It certainly has come as a shock to many,” Krizsan said.
Currently, the M.D. collects the following taxes:
• Farmland is 11 per cent of total property taxes for $1,034,000;
• Residential is 27 per cent of total property taxes, for $2,477,000;
• Non-residential is 62 per cent of total property taxes, for $5,800,000, with that projected loss of $1,034,000.
He suggested the M.D. consider developing a property tax policy outlining what each property class pays. This would remove some of the potential “knee-jerk” reactions to expand services when the municipality has additional tax revenue coming in.
At present, the M.D. has no such policy.
Krizsan went on to say the government is looking at this issue in a piecemeal fashion. When that is done, the result is a disjointed system.
Coun. Evan Berger noted some municipalities have relied almost exclusively on non-residential taxation, pointing to Cypress County which has 97 per cent linear or non-residential taxes and three per cent farmland.
Coun. Ian Sundquist asked how much of an effect will there be with urban versus rural.
Krizsan responded the total assessment will go down for the M.D.
Since the province uses equalized assessment to determine education and housing requisitions, the M.D. ratepayers will pay less, meaning the urban or town ratepayers will be paying more.

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