New tax exemptions gain backers in Legislature

  • Sat Mar 6th, 2010 10:16pm
  • News

By Brian Everstine Associated Press

OLYMPIA — Even as majority Democrats call for the closure of tax loopholes as they try to address the state’s $2.8 billion budget deficit, new exemptions are making their way through the legislature.

The biggest new loophole is a proposed 15-month sales tax exemption for data centers. Central Washington’s cheap power and ample real estate have drawn corporations to build server farms and other data centers in Washington, but the state’s tax system has begun to push them elsewhere.

In 2007, state Attorney General Rob McKenna ruled that data centers were not covered by a different state sales tax break because they do not produce a product to be sold. Since then, tech corporations have looked outside of Washington to build the centers. Redmond-based Microsoft decided last summer to move a data center out of Washington to Texas because of the state’s tax laws. Facebook chose Prineville, Ore., for a new data center.

“We would be the front runner to capture those jobs and those data centers,” said Sen. Joseph Zarelli, R-Ridgefield, the minority’s budget chief and a sponsor of the bill.

The proposed exemption does not have an estimated cost to the state, because if the exemption isn’t approved, the data centers will not come, said Sen. Ed Murray, D-Seattle. The corporations building the facilities will be exempted from sales tax if they come, but will still need to pay property tax and utilities.

And most of all, they will create jobs, Murray said.

Other proposals include tax exemptions for churches that hold farmer’s markets, for aircraft used to provide ambulance services for nonprofits and a sales tax reduction for online versions of the state’s newspapers