Stein data center tax plan draws attention from lawmakers

North Carolina Governor Josh Stein's administration is scrutinizing the state's long-standing sales tax exemption for data centers. The governor cites concerns that the industry's rapid expansion could significantly increase electricity demand and potentially raise costs for residential and small-business ratepayers. Speaking during a State Energy Policy Task Force meeting, Stein argued that data centers should "pay their way" to prevent consumers from bearing the brunt of higher power bills, questioning the rationale behind continuing the tax incentives. A recent Carolina Journal poll revealed strong public support among North Carolina voters for requiring data centers to generate their own electricity. However, lawmakers and industry representatives have voiced bipartisan concerns regarding both the process and substance of Stein's proposal. Rob Corradi, an Amazon government affairs official, questioned whether the State Energy Policy Task Force is the appropriate venue for discussing such a major tax policy change, suggesting the discussion should originate within the General Assembly. Corradi also warned that altering tax incentives after companies like Amazon have committed substantial investments, such as a planned $10 billion data center project in Richmond County, could negatively impact the state's business reputation. Critics on the task force highlighted a lack of comprehensive data, noting that North Carolina does not accurately track the true cost of the sales tax exemptions or fully understand the broader impact of data centers on energy demand and infrastructure needs. They also argued that the administration's analysis presented an incomplete fiscal picture by emphasizing potential lost tax revenue without fully accounting for the economic benefits of data center investment. The discussion is currently in its preliminary stages, with no formal legislative proposal having been introduced, and any changes to the tax code would require the approval of the General Assembly.