Finance committee hears testimony on digital-ad tax bill that supporters say could raise hundreds of millions

HARRISBURG — The House Finance Committee on April 29 heard expert and advocacy testimony on House Bill 1678, a measure that would extend Pennsylvania's gross‑receipts tax to digital advertising revenue generated by major platforms.

Sponsor Rep. Elizabeth Fiedler opened for the bill, saying it would not raise taxes on working Pennsylvanians but would ask large digital‑advertising platforms to "simply pay their fair share for doing business in our commonwealth." She said proponents estimate the proposal "could bring in between 300 and $600,000,000 in revenue in just 1 year." (Representative Elizabeth Fiedler)

Professor Darian Shankski of the University of California Davis School of Law described the proposal as an effort to "modernize Pennsylvania's gross receipts tax in order to include these gross receipts from these advertisements." He reviewed international precedents and the Maryland experience, saying that a carefully framed gross‑receipts approach can be more legally robust but acknowledging that "it's a very hard case" and that litigation in Maryland and elsewhere has taken years to resolve.

Gabriela Bentancourt, senior director of research at the Action Center on Race and the Economy (ACRE), framed the bill as one piece of a broader "tax billionaires" platform and cited estimates that the top five digital‑advertising companies (Google, Meta, Amazon, TikTok, Microsoft) account for roughly 90% of industry revenue. She said Pennsylvania's share of digital‑ad revenue is roughly 4% of the U.S. total, and coalition estimates for Pennsylvania hover around $500 million annually.

Committee staff referenced a recent PricewaterhouseCoopers/Interactive Advertising Bureau report showing U.S. digital‑advertising revenue at about $258 billion in 2024. Using Pennsylvania's approximate 4% population share, staff estimated about $10 billion in state-attributable ad revenue; at a 5% gross‑receipts rate that would suggest roughly $500 million annually based on 2024 figures.

Members asked whether jurisdictions that have enacted or proposed similar taxes saw costs passed on to small businesses. Professor Shankski and Ms. Bentancourt said passing the cost forward to consumers or small advertisers is possible but not inevitable, and that market concentration limits platforms' ability to pass along additional costs in full. Members also asked about legal risks; Professor Shankski said industry litigation is likely but that legislative drafting that links the tax to existing gross‑receipts rules strengthens the state's legal position.

Members referenced actions in other jurisdictions, including Maryland (which enacted a digital‑ads tax that is the subject of ongoing litigation), Washington state, the city of Chicago and legislation proposed in Utah. Witnesses urged careful statutory drafting; Ms. Bentancourt said the Pennsylvania proposal includes protections such as exemptions for small newspapers and broadcasters.

The committee did not take a final vote on House Bill 1678 on April 29. Committee leadership said they will continue to review the PricewaterhouseCoopers report and further legislative options in the coming weeks.

Quotation attribution: Representative Fiedler; Professor Darian Shankski; Gabriela Bentancourt.