17 September 2011 — Cloud computing is one of those disruptive shifts in technology that has Silicon Valley giddy with excitement. Just don’t expect to find local governments among those cheering this revolution.
Thanks to California’s hopelessly outdated sales tax rules, the move to delivering technology through the Web — the essence of cloud computing — is eroding the sales taxes that towns depend on to fund everything from police to parks. And as cloud computing extends its reach, it promises to further squeeze the budgets of towns that have already been pinching pennies for years.
It’s hard to put numbers on the impact of cloud computing on local budgets. That’s because sales tax collection data are deemed private information, another ridiculous concession the state has made in favor of businesses over the interests of citizens.
Local government officials know the numbers, though they are sworn to secrecy. But what they see happening has them urging the state to overhaul its tax rules.
“Increasingly, major technology companies don’t bring any sales tax revenues,” said Kim Walesh, economic development director for … Read more