By Nia Williams
CALGARY, Alberta (Reuters) - Canada's main energy-producing province Alberta is proposing to amend legislation in order to give municipalities more power to collect unpaid property taxes worth C$245 million ($199 million) from oil and gas companies, the government said on Thursday.
Municipal Affairs Minister Ric McIver put forth the amendment in the Alberta legislature and said it would be a "hammer" to convince companies to pay their taxes. The minister also said the move would not solve the entire problem.
"Some bad actors are ignoring the rules and refusing to pay what they owe," McIver told a news conference. "I am not optimistic municipalities will collect 100% of what's owed, but I am optimistic this will improve the situation."
The C$245 million unpaid taxes in 2021 is up 42% from last year. The government said approximately 40-60% of the total is owed by companies still operating in Alberta; the rest belongs to companies facing insolvency.
Alberta did not name the companies owing taxes, but said most were private or foreign-owned.
The proposed amendment will restore a so-called special lien allowing municipalities to take priority over other creditors and reclaim unpaid taxes if a company goes bankrupt. It would also allow municipalities to seize some assets to cover outstanding debts.
Alberta is the heartland of Canada's energy industry. Most oil and gas extraction takes place in rural municipalities that depend on property tax revenues to balance their books, and must raise taxes or cut services to cover any shortfall.
Energy Minister Sonya Savage said the unpaid taxes were a symptom of a five-year slump in the Canadian energy sector that deepened in 2020 because of the COVID-19 pandemic, and decades of insufficient rules around liability for oil and gas drillers.
"It's an underlying problem that's been decades in the making that we are addressing," Savage said, adding the government was also looking at steps to help landowners who are owed surface lease payments by energy companies.
($1 = 1.2335 Canadian dollars)
(Reporting by Nia Williams; Editing by David Gregorio)