RALEIGH — From Richmond County to Catawba County, data centers are popping up across the state. North Carolina is an enticing location for these developments.
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Current law says data centers do not have to pay sales taxes on construction costs, equipment, or electricity when the costs are at least $75 million.
Gov. Josh Stein wants to change that.
“I am calling on the legislature to reexamine those incentives, to make sure that they are structured in a way that makes sense for the people of North Carolina,” Stein said.
The North Carolina Department of Commerce estimates existing data center operators in North Carolina receive an estimated $20 million per year in electricity-related sales tax exemptions and between $25 million and $37 million per year in exemptions on replacement equipment purchases.
“They actually get a rebate on how much electricity they can consume, which is almost incentivizing them to consume more electricity, to create more demand on the system, which raises the rates on everybody else,” Stein said.
Dan Diorio with the Data Center Coalition said it would be a mistake for North Carolina to do this.
“It helps data centers defray the cost of ongoing capital purchases, which are namely the servers,” Diorio said.
38 states have sales tax exemptions for data centers, he said. Changing this would make data centers less likely to invest in the state and invest in their own facilities with upgrades.
“I think it will dramatically impact whether or not North Carolina can remain competitive in an increasingly competitive marketplace throughout the country,” Diorio said.
Senate Leader Phil Berger has signaled a willingness to look at the issue but no bills have been filed.
In addition to requiring $75 million in investment, the only other requirement data centers must make for tax breaks is to provide healthcare for full-time employees.