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

Author

Listed:
  • Brian Conger

    (School of Public Policy, University of Calgary)

  • Bev Dahlby

    (School of Public Policy, University of Calgary)

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.

Suggested Citation

  • Brian Conger & Bev Dahlby, 2015. "Policy Forum: Taxation of Machinery and Equipment and Linear Property in Alberta," Canadian Tax Journal, Canadian Tax Foundation, vol. 63(2), pages 487-499.
    • Handle: RePEc:ctf:journl:v:63:y:2015:i:2:p:487-499
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    File URL: https://www.ctf.ca/EN/Publications/CTJ_Contents/2015CTJ2.aspx
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    Citations

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    Cited by:

    1. Benjamin Dachis, 2018. "Death by a Thousand Cuts? Western Canada’s Oil and Natural Gas Policy Competitiveness Scorecard," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 501, February.
    2. Tedds, Lindsay M. & Euper, Brock, 2019. "The Costs of Energy-related Linear Property on Local Governments in Canada and the Role of That Local Government Revenue Tool Can Play in Addressing these Costs," MPRA Paper 96918, University Library of Munich, Germany.
    3. Bev Dahlby & Melville McMillan, 2022. "Provincial Transfers and Financing Municipal Infrastructure in Alberta," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 15(26), September.

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