A new Washington state law modifying tax exemptions for data centers also benefits agricultural processors and craft distilleries. Senate Bill 6635 extends a sales and use tax exemption to eligible data centers that begin construction prior to July 1, 2016, and also extends until a business and occupation tax exemption crucial to commercial ag processors, including those that handle fruits, vegetables, dairy and seafood.
The exemption offers producers a competitive advantage as processors are able to compete against other states that don’t have a business and occupation tax. The state’s food processing and manufacturing industry generated $17 billion in 2011 and created more than 18,000 jobs and $1.4 billion in wages and $1.5 billion in added value.
The governor signed the bill, sponsored by Sen. Janéa Holmquist Newbry of Moses Lake, on May 2. In 2010 the Legislature passed Senate Bill 6789, which provided a sales and use tax exemption for eligible server equipment and power infrastructure in eligible computer data centers where construction commenced between April 1, 2010, and before July 1, 2011.
Since the incentive expired Washington has seen only one data center constructed. In the past year, however, several companies announced the construction of data centers outside Washington. For example, Oregon gained data centers from Apple, Facebook, Rackspace, Amazon, Adobe and Fortune.
Craft distilleries, a relatively new industry in Washington, are exempted from a license issuance fee which is equal to 17 percent of all spirits sales revenues.