Policy Forum: Taxation of Machinery and Equipment and Linear Property in Alberta

Brian Conger () and Bev Dahlby ()
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Brian Conger: School of Public Policy, University of Calgary

Canadian Tax Journal, 2015, vol. 63, issue 2, 487-499

Abstract: Municipalities in Alberta collected $1.75 billion from the taxation of machinery and equipment and linear property (MELP) in 2013. MELP taxes are fixed charges that reduce cash flow and increase the cost of new investments in oil sands projects, unconventional and conventional oil and gas developments, and pipelines. The distribution of the MELP tax base is highly concentrated among a few municipal districts and specialized municipalities, with the top 10 municipalities accounting for 56 percent of the $113.7 billion in equalized MELP assessment in 2013. Four municipalities collected more than $10,000 per capita in municipal property taxes in 2013, with the Municipal District of Opportunity, population 3,061, receiving the largest amount, $21,329 per capita. In addition to the disparities in the per capita assessments, some municipalities have taken advantage of the presence of fixed, location-specific, MELP investments to impose very high non-residential mill rates, so as to collect additional tax revenues. Provincial policies regarding MELP taxation should be reviewed, given the concentration of MELP tax revenues in a few municipalities and the negative impact that these taxes can have on investment in the oil and gas industry.

Keywords: Tax policy; rural development; property taxes; pipelines; oil industry; municipal finance (search for similar items in EconPapers)
Date: 2015
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