BONNYVILLE - A three-year tax holiday on new wells and pipe assets announced in October 2022 by the provincial government as an incentive to encourage new industrial development in the province is set to expire for the 2024 tax year.
For municipalities like the MD of Bonnyville, no tax was collected on new wells drilled or pipelines laid for the 2021, 2022 and 2023 assessment years.
During its Sept. 12 meeting, MD council heard directly from the Office of the Provincial Assessor just what that tax holiday meant to their tax roll.
“In your municipality, there were some wells drilled that had an assessment value of right around $74.5 million and there was some pipeline laid that also had an assessed value of just over $18.5 million. So, these had an accumulative assessed value of right around $93 million,” Brad Hurt, Industrial Sites manager with the provincial assessment division, told council.
“After this year, those will be placed on the municipality’s (tax) role, and you will be able to issue taxes on those.”
The tax holiday combined with the move in 2019 to launch an assessment model review of how wells, pipelines, wellsite equipment and machinery are assessed in addition to the government centralizing industrial property assessment in 2018 were not popular with many municipalities.
The potential impact of those proposed updates (in the model review) caused significant stakeholder concern, so the review was put on hold, Hurt acknowledged. The government has since moved to establishing a steering committee on engaging the key players (municipal and industry) in the review process. No timeline has been set for the engagement phase.
“We need to collaborate with all parties to achieve that goal of making sure we are growing Alberta’s economy,” Hurt said. “We hope to collaborate with municipalities going forward and have a good exchange of information to support each other to achieve this end of growing Alberta’s economy and ensuring a fair, equitable and stable assessment base for all of our municipalities.”
Deputy Reeve Ben Fadeyiw said the impact of the tax holiday to the operations of the MD, especially on its infrastructure, should not be ignored.
“You don’t know what kind of stress the municipality goes through for our infrastructure when this holiday came into place,” Fadeyiw said, adding that when it comes to budget time “it’s not fun.”
The MD councillor also expressed concern about the assessment review and suggested he had little faith municipalities would come out ahead of the game when the dust settled.
“It sounds to me like you guys are not going to go the way to favour municipalities . . . Energy companies need to answer to their investors and their dividend stakeholders. The ones we have to answer to are the Alberta taxpayers and the municipal taxpayers. Please keep that in mind – there is only one taxpayer.”
Alberta’s designated industrial (DI) property assessment sits at $184 billion province wide. This includes farmland (non-residential), buildings (non-residential), machinery and equipment, cables, pipeline, telecommunications, and wells.
“Over the last three years, we’ve gone from $171 billion to $184 billion. We didn’t see a lot of increase in 2022 but we sure saw a lot of increase this year,” Hurt said of Alberta’s DI property assessment growth. “Overall, we had a pretty healthy increase in assessed values, just over $11 billion,” he said, adding that translates to a 6.5 per cent increase.
The MD of Bonnyville has almost $6 billion in DI property assessment on its books in the 2023 tax year, which is up about $246 million from the previous year. The DI property inventory in the MD is comprised mostly of electric power facilities, pipelines, machinery and equipment at well sites.
“When we see energy companies shelling out millions of dollars to different communities, we know there’s money and there’s growth for Alberta and we need to play that carefully,” Fadeyiw said.
