More than 50 Virginia businesses and Virginia business organizations from across the state urge budget writers to exclude Senate’s termination of Data Center Retail Sales and Use Tax Exemption from final budget

A statewide coalition of more than 50 prominent Virginia businesses and business organizations from across the state today asked Virginia legislators to protect Virginia’s economy and reputation by passing a state budget that excludes the Senate’s proposal to terminate Virginia’s successful data center sales tax exemption program.

Among the fifty-five signers of the letter to Virginia’s budget writers and legislative leaders are the Virginia Chamber of Commerce, ChamberRVA, the Loudoun, Prince William, and Northern Virginia Chambers, local economic development organizations, and major construction and manufacturing firms from every region of the state.

“As major stakeholders in Virginia’s business community, we write to express our serious concern about the Virginia Senate’s proposal to terminate the state’s successful Data Center Retail Sales and Use Tax (DCRSUT) exemption program,” the letter states. “The proposal, if enacted, would do significant damage to one of the Commonwealth’s most economically impactful industries and send an exceptionally negative message to other businesses across industries that are considering investment, relocation, or expansion in the Commonwealth of Virginia.”

The letter from businesses and organizations from around Virginia details the significant economic impact of the data center industry in communities across the state. According to the Department of Taxation, the data center industry invested $80 billion and generated $5.3 billion in local and state tax revenue in just the last two years. An analysis by the General Assembly’s Joint Legislative Audit and Review Commission (JLARC) found that the data center industry is estimated to contribute 74,000 jobs, $5.5 billion in labor income, and $9.1 billion in GDP to Virginia’s economy annually.

“During a time of economic challenge and uncertainty, it would be unwise to close our doors to an industry that is investing, hiring, growing, and delivering economic benefits in communities across Virginia,” the coalition writes.

The group’s letter also raises concerns about the harm the proposal could cause to Virginia’s reputation as a strong and reliable partner for businesses looking for a home where they can invest, grow, and thrive. All data centers that utilize Virginia’s sales tax exemption have signed Memoranda of Understanding that run through 2035 and require the companies to meet significant investment and hiring thresholds. The Senate’s budget proposal would terminate these signed agreements in just nine months.

“Data center developers and operators have invested hundreds of billions of dollars in Virginia, with billions more in the development pipeline, based on the Commonwealth’s commitments to robust economic development,” the group writes. “To terminate those active agreements and abruptly end this program will cause every business to question Virginia’s reliability as a partner in their growth and wonder if the Commonwealth stands behind its economic development programs and its commitments to its partners in the business community. Whether they are investing thousands, millions, or billions of dollars, companies will have to think twice before committing to a state that may change the rules unexpectedly.”

In addition to Virginia, more than 35 states have a similar data center sales tax exemption program. JLARC has found that 90-100% of Virginia’s data center investment would not have occurred without the program, while the Department of Taxation has found that the industry has generated $2.1 billion in net tax revenue above the value of the tax exemption for an annual return on incentive of 11%.

A full copy of the letter from Virginia businesses and business organizations is available here.

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About the Virginia Chamber of Commerce: 

The Virginia Chamber of Commerce is the largest business advocacy organization in the Commonwealth, with more than 30,000 members. The Virginia Chamber is a non-partisan organization that champions the interests of the business community in the legislative, regulatory, and political arenas to serve as the catalyst for positive change in all areas of economic development and competitiveness for Virginia. Learn more at www.vachamber.com