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House Finance Committee advances bill to extend gross-receipts tax to digital advertising
Summary
The House Finance Committee reported House Bill 1678 to advance a 5% expansion of Pennsylvania's gross receipts tax to certain digital ad sales. Supporters called it a necessary modernization that could raise hundreds of millions; opponents warned of small-business impacts and possible federal preemption.
The House Finance Committee voted to report House Bill 1678 (printer's no. 2050), a measure to extend Pennsylvania's 5% gross receipts tax to specified digital advertising revenue.
Representative Abney, a co-prime sponsor, introduced the measure as an update to "an 18th‑century" tax structure and said the bill would capture revenue from banners, search results and full‑screen interstitial ads. "This legislation proposes to include the sale of some digital ads, which are currently untaxed in the Commonwealth," Abney said, urging colleagues to support the measure as a modernization of the GRT.
The bill drew both endorsements and objections. Representative Kroyewski said the proposal was a matter of fairness and estimated the policy could yield "300 to $600 million" in additional annual revenue; Representative Waxman described a near‑$500 million estimate and urged passage. Committee discussion also cited national figures: committee members referenced reports putting U.S. digital ad revenue at about $294 billion in 2025 and noted Pennsylvania represents roughly 4% of that market.
Opponents cautioned about unintended consequences for small businesses and legal risks. Representative Rossi said small businesses in rural districts could struggle to absorb added costs and noted ongoing litigation in the few states that have enacted similar levies. "Small business may not be able to absorb these costs like a national competitor is able to," Rossi said, and added that uncertain legal outcomes left him unwilling to support immediate enactment.
Chair Griner raised constitutional concerns and warned of federal preemption, saying she believed "what we're doing is likely unconstitutional" and that federal law may ultimately govern internet commerce. Representative Venkat said he shared preemption questions but would vote to advance the bill out of committee so the full Legislature could refine legal and administrative issues.
The committee reported the bill from the Finance Committee (the record states it was "reported ... as committed"). The record does not show an on‑floor numeric roll‑call for HB 1678 in this meeting; the transcript marks the item as reported from committee.
