Georgia Fails to Curb Business Tax Breaks, Sparking Criticism and Debate on Data Center Exemptions

Georgia lawmakers failed to follow through with their promise to limit business tax breaks this year. Governor Brian Kemp vetoed a two-year freeze on a sales tax exemption for building and equipping computer data centers, citing the investments already made by companies and potential harm to infrastructure and job development. This decision has been criticized by some who argue that such tax breaks create self-interested lobbies and make it difficult to eliminate them. The debate over data centers is not unique to Georgia; similar issues have arisen in Virginia and Arkansas. Some in Atlanta want to ban data centers near transportation hubs and walking trails and halt local property tax abatements on top of the state sales tax exemption, as these facilities often employ few people despite significant investments. A review found that between 2024 and 2030, Georgia will forgo $307 million more in revenue due to data center construction and operations than it will collect from sales taxes. Lt. Governor Burt Jones, who advocates for lowering Georgia’s state income tax rate for all residents and businesses, has expressed concerns about offsetting these cuts with other tax revenue sources. While Senator Chuck Hufstetler supports scrutinizing existing tax breaks, he admits that eliminating them is challenging. Some environmental groups oppose the tax exemption because it promotes the use of natural gas to generate electricity for data centers, which increases greenhouse gas emissions. Georgia Power argues that new users will cover the cost of additional generating capacity required by the increasing number of data centers. However, there are worries that electricity prices will continue to rise in Georgia.