Mar 03, 2023 | Posted by Abdul-Rahman Oladimeji
The Idaho legislature has rejected a proposed bill that would have limited tax breaks for data centers. The proposed plan, introduced last month, would require either a sales tax exemption or urban renewal regions for data centers, but not both. The measure failed in the House Revenue and Taxes Committee by a vote of 8-7 and has been referred to the Local Government Committee. In an effort to attract more developers to the state, Idaho enacted a measure in 2020 exempting from sales tax those who invest at least $250 million and generate at least 30 jobs.
Under the existing laws, developers of data centers are eligible for both the sales tax exemption as well as a property tax benefit classified as an urban renewal district, which improves the local infrastructure in the area where the facility is located. In urban renewal districts, property taxes do not return to the general base but instead fund infrastructure upgrades in that region, thus funding the infrastructure a data center will utilize.
The proposed legislation would require developers of data centers to pick between two tax incentives, but not both. It was presented by Democratic Congressman John Gannon, who stated that it would prohibit firms from "double-dipping." By requiring data centers to pay more, the bill's proponents claim it will increase tax revenues for the region. Opponents argue that the law will inhibit growth in the state and impede the attempts of local governments to diversify their revenue base.
