As state budget negotiations continued in Harrisburg last week, the House Rules Committee amended and advanced sweeping anti-business legislation that includes historic business tax increases and regulatory burdens, with all Democrats voting in favor and all Republicans opposed. The legislation, House Bill 1667, contains a broad package of tax increases, utility regulations, and economic development policy changes that would significantly increase costs for employers, discourage private-sector investment, and weaken Pennsylvania’s competitiveness.

The full House was expected to consider the bill on Friday before it was removed from the calendar.

House Bill 1667 remains pending before the chamber and could be brought up for a vote when lawmakers return to session, though no return date has been announced.

House Bill 1667 contains provisions that would significantly increase costs and create uncertainty for employers, including:

• Combined Reporting: House Bill 1667 would impose mandatory unitary combined reporting for Pennsylvania businesses, creating an entirely new corporate tax structure that would raise taxes by over $1 billion, increase compliance burdens, and make the Commonwealth less competitive for business investment. The policy would introduce significant complexity, create additional uncertainty for employers, increase administrative costs, and make Pennsylvania’s business income tax code one of the most hostile in the nation, according to the Council on State Taxation (COST).
• Digital Advertising Tax: The legislation would impose a five percent gross receipts tax on digital advertising, a cost that would ultimately be passed on to Pennsylvania businesses, particularly small businesses that rely on affordable digital marketing to reach customers. Rather than taxing “big tech,” the proposal would directly increase costs on Pennsylvanians. The tax also raises significant legal concerns because it specifically targets internet-based commerce while exempting traditional advertising platforms.
• Return on Equity Restrictions for Utilities: House Bill 1667 would undermine investment in Pennsylvania’s energy infrastructure by imposing new limits on utility returns. Pennsylvania’s regulated utilities invest billions annually into grid modernization, reliability improvements, and infrastructure projects that support businesses and communities across the Commonwealth. Creating new statutory restrictions would discourage investment and ultimately risk higher costs for energy customers.
• Repealing the Data Center Sales and Use Tax Exemption: The bill would also repeal the sales and use tax exemption for data center equipment, undermining a bipartisan policy enacted to attract critical digital infrastructure investments. Data centers support nearly every sector of the economy, including healthcare, manufacturing, financial services, and emerging technologies. Changing the rules after businesses have made long-term investment decisions based on existing policy sends a damaging message that Pennsylvania’s economic development environment is unpredictable and unreliable.
• Removing Commercial Customers from the Gross Receipts Tax Exemption: House Bill 1667 would provide electricity tax relief only for residential customers while continuing to impose the gross receipts tax on commercial customers. This would unfairly subject Pennsylvania businesses to comparatively higher energy costs at a time when employers are already navigating inflation, rising expenses, and increased competition from other states.

Taken together, House Bill 1667 is a sweeping departure from the bipartisan reforms enacted in recent years to improve Pennsylvania’s business climate. The legislation would increase taxes, raise operating costs, discourage investment, and place the Commonwealth at a competitive disadvantage at a time when states across the nation are aggressively competing for jobs, investment, and economic growth.