I’m thinking there may be a bit of a kerfuffle over this.
Massachusetts could be readying to level a state tax on cloud-computing providers.
Governor Deval Patrick is proposing a sales levy on “computer and data processing services,” a broad categorization that includes everything from building Websites to backing up data in the cloud—in fact, according to his budget for fiscal year 2014, the only exemptions are “(1) downloaded books, music, videos or ringtones, or (2) computer facilities management services.”
“I think the best way to say it is we need our tax code to catch up with the way that technology is affecting everyone in their daily lives,” David Sullivan, legal counsel for the Executive Office for Administration and Finance, told the radio station. “Our tax agency is no different from the rest of the world. We’re not living in the 19th century any more.”
The station also quoted Paul Davis, CEO of local data-analytics firm Intelligent Integration Systems, as saying the proposed tax was “untenable.”
The question now is whether those entities potentially affected by the Massachusetts tax will push back—if enough firms threaten to leave the state, it could compel the governor to adjust his plan.
And it doesn’t stop there:
The tax would cover custom-designed software and services based in the cloud. “Custom” software includes the design of Web sites, so the cost to local businesses of a new Web site would increase by 4.5% on contracts to design the site, write Java, PHP or other custom code. The cost of site hosting and bandwidth would also be taxed.