As the AI infrastructure build-out continues to meet headwinds from concerned citizens, three states recently signed laws ending what had been the largely-standard practice of exempting data center operators from paying sales taxes.
Tucked into a state budget passed on June 15th, Arizona Governor Katie Hobbs touted that data centers located in the state would now have to pay sales tax on the gobs of energy they use.
Bloomberg Tax wrote that the exemption had been operating since 2013, and the move is likely to raise $38 million in revenues for Arizona annually.
In Washington, Governor Bob Ferguson signed a law that on July 1st removed sales tax exemptions for future equipment needed for data centers.
The hardware inside those giant humming hubs of technology has a de-facto operating lifespan of just 3 years on average given the pace of advancement in the development of semiconductors, and thus require routine replacement.
S.B. 6231 would remove the sales tax exemption for data center operators looking to replace that compute.
In late June, the Pennsylvania legislature passed a repeal of tax breaks and incentives for data centers that has stood for 5 years.
The bill’s primary sponsor cited a half-billion-dollar gain in potential revenues over 5 years, and argues that with the abundance of data centers proposed and already existing across PA communities, there’s little reason to keep an incentive (for future equipment purchases) which was designed to attract the activity to the state a decade ago.
“We’re giving these sales tax exemptions to companies like Amazon, Microsoft, Alphabet—companies that have net incomes in excess of $100 billion a year,” said the sponsor, Rep. Greg Vitali (D). “This is not needed.”
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