Unions divided over sales tax exemption for data centers

RICHMOND, Va. (WRIC) -- Virginia’s largest teachers' union is backing a proposal in the Senate-passed budget that would eliminate a sales tax exemption data centers currently receive on certain equipment and software they purchase.

“When powerful interests get special carve-outs, that cost doesn’t disappear; it gets shifted onto working families and onto local communities, trying to do more with less,” said Carol Bauer, President of the Virginia Education Association. 

Data centers say in the last two fiscal years, that tax break has amounted to $3.2 billion. At a press conference on Tuesday, March 3, Bauer said some of that money should be used on increased raises for teachers and other public education initiatives. 

Speakers also said part of the funds should be used to make child care and healthcare more affordable in Virginia. 

“Close special loopholes, ask the biggest, the wealthiest corporations to pay their fair share and use that revenue to make life more affordable for Virginia families and to strengthen the public services that make our communities work,” Bauer said. 

However, Virginia’s Data Center Coalition said the measure would halt data centers’ investments in Virginia, something some trades’ unions said will put construction workers' jobs at risk. 

“If we can’t keep this tax exemption, we know for a fact that businesses, they’re just going to pack their bags, they're gonna go somewhere where they can make more money,” said Kwaku Afriyie, a IBEW Local 26 member, at a separate press conference last week. 

The House-passed budget does not propose getting rid of the data center sales tax exemption entirely, but would require data centers meet certain clean energy standards to use it. 

The House and Senate will have to compromise on one budget to send to Governor Abigail Spanberger.