Sinn Féin spokesperson on Finance Pearse Doherty TD has called on the Minister for Finance and his Department to carry out research into the total amount of capital allowances companies have used against data centre investment to reduce their tax liabilities.
Under current tax law, companies are able to claim capital allowances against money invested in data centres to reduce or completely shelter their tax liability; at a time when the security of supply of electricity for consumers is under threat.
In reply to a Parliamentary Question, the Minister for Finance has been unable to clarify the total tax reliefs gifted to companies for their data centres, with the amount likely to be in the hundreds of millions of euros.
Speaking today, Teachta Doherty said:
“It is clear that the proliferation of data centres in recent years poses a serious threat to the security of our electricity supply, with the regulator warning that consumers face rolling blackouts without intervention.
“EirGrid have projected that data centres will account for between a quarter and a third of all electricity demand by 2030.
“The increase in data centre demand for energy over the past four years is equivalent 140,000 household connections each year.
“The challenges faced by the system has consequences for households and consumers, both in terms of energy security and rising costs.
“Despite these risks, companies are offered lucrative tax incentives by government to invest in data centres here, spurring data centre proliferation and depriving the Exchequer of much needed revenue.
“It is estimated that between 60 and 80 percent of all data centre expenditure qualifies for capital allowances.
“Capital allowances can be used by companies against money spent on data equipment, installations and infrastructure in order to reduce or completely shelter their tax liabilities.
“Given the security threat posed by data centre demand, the tax incentives offered to companies to invest in them should be subject to greater scrutiny.
“Yet the Minister is unable to say how much tax has been lost to the taxpayer through this generous data centre tax regime.
“The Minister and his officials should undertake an immediate review of the current tax reliefs in place for data centre investment, how much it has cost the State in the past and how much it will cost in the future.
“With the security of our energy supply under threat, we cannot afford a tax system that deepens the problem.
“Budget 2022 should remove all capital allowances provided for data centre investment, particularly at a time when our energy security is under threat from their proliferation.”