TOPEKA — A Kansas House committee on Monday supported waiving construction and electricity costs, as well as equipment sales tax, for data center companies that invest at least $600 million in capital and create jobs in the state. The 2023 bill to do so has been shelved. benchmark.
The tax cuts in House Bill 2450, sponsored by NetChoice, a U.S. online business trade group, have been touted as the best way to attract companies like Amazon, eBay, Expedia, Google, and Meta to Kansas’ rolling hills and flatlands. I did. The impetus for the bill was data center companies’ desire to ensure sales tax exemptions were broad enough to include the purchase of servers that would need to be replaced on a regular basis.
“Our members want Kansas to join other states looking to attract large enterprise data centers,” said Steve DelBianco, president of NetChoice. “No corporate data center exists in a state that imposes a sales tax burden on data center equipment.”
He said the Kansas Legislature should extend similar state law equipment tax treatment to data centers for other capital-intensive industries such as manufacturing and agriculture.
The House Commerce, Labor, and Economic Development Committee sent the bill to the House floor by voice vote after about 10 minutes of discussion.
Rep. Will Carpenter (R-El Dorado) asked fellow committee members about the potential cost of the data center sales tax exemption.
“Essentially, we’re waiving sales tax on things that aren’t currently being purchased, but will be purchased if this bill passes,” said Rep. Sean Tarwater, R-Stillwell and chairman of the committee. ” he said. “You’re just waiving sales tax. We’re not writing a check to anyone.”
Carpenter said he understands Tarwater’s views on the incentives offered to companies that may decide to do business in the state.
“I understand that logic, but there’s also another logic that if they come here and we don’t waive the sales tax, there’s going to be a cost to them,” Carpenter said.
The committee held a public hearing on the proposed bill in March 2023, but the bill did not pass during the previous session. The hearing was attended by two Washington-based lobbyists and representatives from the state of Kansas and the Kansas Industry and Consumers Association, which seeks lower electricity rates.
Paul Snyder, president of both groups, said the bill has the potential to expand industrial power demand, spread power costs over more kilowatt-hours, and create opportunities to lower power costs for all consumers. He said that there is. He said the bill doesn’t go far enough.
“The Commission could have an even greater impact on energy rates by exempting state sales tax on electricity use by all commercial entities,” Snyder said. “Residential customers already benefit from the state sales tax energy exemption. It’s no secret that electricity rates in Kansas are among the highest in the region.”
