Late taxes catch Taber M.D. attention

OIL AND GAS INDUSTRY DECLINE HAVING IMPACT

The Municipal District of Taber has been noticing a trend of late tax collection and as a result, have been exploring moving their usual tax collection date up.

With the collection date currently in November, they have been seeing a shortfall in revenue once that particular day comes and passes.

“Currently, the M.D. levies and mails property tax notices out in May each year. The taxes are paid on or before Nov. 15 to avoid the five per cent penalty. Any taxes remaining after December 31 each year have a penalty of 12 per cent that is applied to the outstanding amount. Tax revenues are approximately $20.5 million. The funds are utilized throughout the year to pay budgeted operating and capital expenditures to meet our financial obligations,” said Coun. Jen Crowson at the M.D. of Taber’s Annual General Meeting on April 30.

A major factor of this stems from the steady decline of the oil and gas industry throughout Alberta.

“Over the past few years, commercial bankruptcies have resulted in greater allowances for uncollectible property taxes. The majority of these bankruptcies have occurred in the latter part of each calendar year so usually after Nov. 15.

In 2015, the uncollectible amount after Nov. 15 was $414,000.

In 2016 it was $315,000, in 2017 it was $224,000 and in 2018 $1,029,000. Those totals were actually as of December 31 or January 1,” continued Crowson.

“As of November 16 this past collection year of 2018, we had over $3 million outstanding. As you can imagine as we go into the budgeting season when we are short $3 million we are looking at what we have to cut and where we can trim the budget the best we can.”

As far as changing the date, nothing has been set in stone but council was hoping for feedback on whether or not it was a good idea moving forward.

Crowson also detailed how tax collection was split between the different properties.

“Eighteen per cent of our tax collection is residential, nine per cent comes from farm taxation and then 73 per cent comes from commercial, industrial or non-residential,” said Crowson.

“We do feel that changing the date somewhat it may help us in planning our budget.”

A question came from the crowd around where the major shortfall was coming from.

“The majority is (commercial). In 2018, the

commercial and industrial taxation collection was $14.9 million. Of that shortfall, we had one company that was close to $1 million that they had owed us. We have been able to collect some of that back. So on December 31, we were at $1 million outstanding instead of $3 million,” answered Crowson.

With commercial properties providing a majority of the headaches for the M.D., it was inquired if there were any ways they could get the tax dollars from those companies.

“I’d like to know why the commercial is weaseling out of paying their fair share of their taxes and what the municipality does to recover it?” asked resident Jim Rabusic.

While municipalities across Alberta have been trying to do just that, things were still not looking ideal.

“A recent Alberta court of appeal ruling, Northern Sunrise County versus Virginia Hills, has dealt another blow to rural municipalities in regard to their ability to collect unpaid nonresidential taxes. The court of appeal ruled in this regard that municipalities have no more collection power than any other creditor. Previously to this, we believed we were a secured creditor to the collection of these taxes. This court case indicated that we had no more security than the average creditor to these corporations that are having difficulty paying their taxes and may have entered bankruptcy procedures,” explained Bryan Badura, director of corporate services.

“The authority given to municipalities under the Municipal Government Act is to use distress warrants as a tool to collect unpaid liner taxes and this has also been affected by this decision.”

With this decision, Badura also said Northern Sunrise County has appealed to the Supreme Court of Canada, though they expect it will take awhile for a final ruling.

Further, when oil and gas was steady and thriving, it led to lower tax rates in the M.D. but with the shift in the oil and gas sector, taxes for all properties may start to level off to cover the shortfall.

“Over the past 20 years, the contributions from the oil and gas sector enabled the M.D. to maintain some of the lowest taxation levels in all of Alberta. Previously, the healthy oil and gas sector lowered taxation rates for farmland and residential property. The impact of the downturn in Alberta’s resourcebased economy indicates tax shifts to farmland and residential could become a reality. In the foreseeable future, rural municipalities will continue to see the collection of the non-residential side of the tax levy become more difficult,” continued Badura.

With the majority of the issues from late collection coming from commercial properties, it was asked if they could implement separate collection dates for properties.