The Pennsylvania Chamber of Business and Industry joined lawmakers, small business advocates, and employers from across the Commonwealth last week to oppose House Bill 1678 – legislation that would impose a burdensome new tax on digital advertising.

 

Speaking at a Capitol press conference, PA Chamber Vice President of Government Affairs Neal Lesher warned that the proposal would undercut Pennsylvania’s recent progress on tax reform and economic competitiveness.

 

“We’ve been making progress over the last few years to make Pennsylvania more competitive through various tax reforms, and this bill is a step in the wrong direction,” Lesher said.

 

Lesher emphasized that while proponents frame the measure as a way to target large technology companies, the real impact would be felt by Pennsylvania consumers and employers – especially small businesses that rely on digital platforms to reach customers.

 

“We have to think about the way that digital advertising works,” Lesher said. “Making advertisements more expensive under this legislation will also make ads more expensive for the restaurant that is trying to get the word out about their weekly specials -they simply can’t afford that.”

 

During his remarks, Lesher addressed several key misconceptions surrounding H.B. 1678:

 

Myth: The bill is a tax on big tech
Lesher said the structure of the digital advertising marketplace means increased costs will ultimately be passed along to advertisers – local businesses trying to grow and compete in today’s economy.

 

Myth: The bill does not tax Pennsylvania businesses
On the contrary, Lesher explained that the proposal effectively taxes services tied to digital advertising. Revenue generated from ads purchased and used in Pennsylvania would already be subject to the state’s Corporate Net Income Tax – meaning this legislation would result in double taxation.

 

Myth: The bill is legally sound
Lesher also raised concerns about the legislation’s constitutionality, noting that a Maryland circuit court has already ruled that a similar law in that state is an illegal tax prohibited under the federal Internet Tax Freedom Act. If enacted in Pennsylvania, he warned, H.B. 1678 would likely face legal challenges and be defeated in court.

 

The PA Chamber was joined in opposition by a broad coalition, including representatives from the National Federation of Independent Business (NFIB), House Republican Whip Rep. Tim O’Neal, R-Washington, and small business owners from various industries.

 

Rep. O’Neal underscored the importance of digital advertising as a modern-day business tool, comparing it to traditional newspaper advertising.

 

“Digital ads are the new newspaper ads – the easiest way for businesses to get the word out,” O’Neal said. “They should not be unduly burdened.”

Speakers throughout the press conference echoed a common concern: that H.B. 1678 amounts to a double-taxation scheme that will drive up costs for employers and ultimately be passed on to consumers.

 

The PA Chamber’s opposition to the bill was also expressed in a recent memo to House lawmakers. The legislation has passed the House and awaits consideration in the Senate Finance Committee. The PA Chamber urges Senate lawmakers to reject this bill and instead support policies that promote economic growth, strengthen Pennsylvania’s competitive position, and empower businesses of all sizes to succeed—without imposing new and burdensome taxes on the tools they rely on every day.

 

Photos from the event were posted to the PA Chamber’s X account.

Click here for a video outlining why the Digital Ads Tax is a bad idea.