(The Center Square) – Omnipresent digital advertising that appears in search results, on websites, in social media feeds, and as commercial interruptions to digital content is an industry poised to exceed a trillion dollars in the next five years, according to a study by GroupM, a media agency.
Legislators in the House want to see the state bring home some of the revenue from that industry, proposing a 5% gross receipts tax on digital advertising.
“We all agree that Pennsylvania needs more revenue come budget season to fund the public services we care about, like public schools, libraries, and communities,” said the bill’s prime sponsor, Rep. Elizabeth Fiedler, D-Philadelphia.
While the bill comes at a moment when public sentiment over wealth inequality has grown to a fever pitch, legislators say that this is simply a fair tax on money being derived from Pennsylvanians.
“This bill makes a commonsense change by applying the gross receipts tax to digital advertising, just like we already do for other industries,” said Rep. John Inglis, D-West Mifflin.
He noted that since instituting a similar tax, Maryland has raised over $170 million. Currently, they’re the only state to have done so, and challenges from Internet giants including Meta, Google, and Apple have the state on the defensive even as others consider similar measures.
The legislators say it isn’t just about asking Internet businesses to pay their fair share.
“At the same time, we’re protecting local broadcasters and independent news outlets who serve the public good,” said Inglis. “It’s about fairness, accountability, and making sure our laws keep pace with the modern economy.”
House Democrats have also recently passed a bill that requires multi-state corporations to use combined reporting, which if enacted would ensure that they pay tax in Pennsylvania rather than lumping their income together in states like Delaware where tax isn’t charged.
“The fact that mega-corporations can use our private data to sell us ads that make our experience on the internet more difficult and frustrating – without contributing anything to our commonwealth – is insulting,” said Fiedler. “It’s time for the billionaires to contribute and pay up.”
