(The Center Square) – Less than a month before the deadline to finalize a budget for a state with a roughly $5 billion deficit, a potential new source of revenue for Pennsylvania has been put into play by House Democrats: taxing digital ads.
A Democratic-run committee on Wednesday approved a bill to do just that, with some members saying it could generate more than $500 million in new tax revenue a year. The vote came 27 days before the June 30 budget deadline.
It was not immediately clear how two of the most important parties in the budget process – Democratic Gov. Josh Shapiro and Republican Senate Majority Leader Joe Pittman of Indiana County – felt about the concept of expanding the Gross Receipts Tax category to include digital advertising.
Asked how the governor felt about expansion, Press Secretary Rosie Lapowsky on Friday wrote, “We are monitoring the bill as it moves through the legislative process.” Asked for a reaction to the House Finance Committee vote to approve the expansion, an emailed statement from Pittman said that if the full, Democratic-controlled House passes the measure and sends it to the Republican-controlled Senate “we’ll obviously take a look at it.”
The committee vote was a party-line 14-12, with all Democrats in favor and all Republicans opposed.
Proposed amendments to the bill are likely to be considered by the full House on Monday, according to Committee Chairman Rep. Steve Samuelson, a Northampton County Democrat. He said it was possible a final vote in the House could come later in the week.
“This revenue would be paid by some of the largest corporations in America,” Samuelson said on Friday. Google and Meta, he said, each had a total digital advertising revenue figure for 2025 that far exceeded the overall Pennsylvania budget figure of $50.1 billion.
The Gross Receipts Tax has been on the books in the state for more than a century. Its current reach includes electric companies, telecommunications, transportation, and private bankers. Some high-profile categories covered by the tax pay at 5%, and the bill that came to the Finance Committee proposed that rate for digital advertising.
“Mega-corporations like Google, Meta, Amazon, and Microsoft maximize profits by collecting our private data to sell us ads: the banners on news sites, artificially boosted search engine results, and full screen pop-ups. Not only do these ads make our experience on the internet more difficult, they’re also not subject to taxation,” the bill sponsor, Democratic Rep. Elizabeth Fiedler of Philadelphia, wrote in a memo.
Samuelson said at the committee meeting that revenue nationwide from digital advertising was $258 billion in 2024 and $294 billion in 2025. Of that total, Pennsylvania likely had about $11.8 billion, Samuelson said, indicating the yield from a 5% tax would be more than $500 million.
Another Democrat, Rep. Rick Krajewski of Philadelphia, said the internet has changed.
“It has become this digital playground where these massive companies just take our time and attention. All of us have been on your phone, trying to look up something on Google, trying to read an article, and you are just inundated by these ads,” he said.
Republicans disliked the concept for multiple reasons. Rep. Leslie Rossi of Westmoreland County said it would hurt small businesses and consumers would end up paying for the increased taxes.
The top Republican on the committee, Rep. Keith Greiner of Lancaster County, said he believed the bill was unconstitutional. It conveyed an “anti-business attitude” that Greiner said “has to stop here in Pennsylvania.”
