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Senate of Pennsylvania
Session of 2017 - 2018 Regular Session


Posted: June 13, 2017 10:17 AM
From: Senator Scott E. Hutchinson
To: All Senate members
Subject: Data Center Sales and Use Tax Exemption
In the near future I intend to reintroduce legislation, similar to SB 798 of last session, establishing a sales and use tax exemption for equipment purchased by data centers and their tenants. This sales tax exemption helps to incentivize the presence of data centers and related industries, such as computer equipment manufacturers and energy providers, in Pennsylvania creating capital investment and high paying jobs as a result.

SB798 was approved by the Finance, and Appropriations Committees. To be eligible for the sales tax exemption, data center owners and operators had to have a minimum payroll of $1 million or make capital investments of $25 million in a county with a population less than 250,000 ($50 million in a county with a population greater than 250,000). In addition, tenants of data centers meeting these requirements would be eligible for the sales tax exemption on purchases of data center equipment if they have a two-year agreement with the certified data center to use 100kw of power per month.

In June 2016, as part of the budget negotiations, SB798 was converted to a sales tax refund program with a limited pool of $5 million. Though a positive first step, a rebate program does not provide the certainty that data centers and their tenants need when making capital investment or site location decisions. A sales tax exemption allows data centers and their tenants to anticipate their savings which helps them plan for additional investments.

I am reintroducing my bill from last session and intend for it to replace the capped rebate program enacted last year. To reduce the cost of the bill and ensure even larger investments in Pennsylvania, I am increasing the investment thresholds that data center owners/operators must meet (from $25 and $50 million to $35 and $60 million respectively). In addition, they must meet both the payroll and capital investment thresholds to qualify for the program. I am also reducing the certification look-back period by eighteen months - from January 1, 2014 to July 1, 2015. Finally, data center owners/operators are not allowed to include the payroll of their tenants to meet the $1 million payroll requirement.

My bill will help create jobs and new sustainable revenue. It promotes economic growth; fosters Pennsylvania’s workforce development through the creation of high-paying, high-tech jobs in computer data centers and related industries; and improves our infrastructure because of the energy and internet connectivity needs of computer data centers. In Pennsylvania, manufacturers already enjoy a sales tax exemption on manufacturing materials and supplies. I urge you to support the same for data centers, an industry that represents the manufacturing of the future. Please join me in cosponsoring this legislation. If you have any questions please contact Nathan Akers in my office at 717-787-9684 or nakers@pasen.gov.

Previous Cosponsors (SB798): Hutchinson, Aument, Bartolotta, Gordner, Rafferty, Smith, Teplitz, Vogel, Vulakovich, and White

Introduced as SB760