The PA Chamber joined lawmakers, small business advocates, and employers from across the Commonwealth last week to oppose House Bill 1678 – legislation that would impose a new tax on digital advertising. Speaking at a Capitol press conference, PA Chamber Vice President of Government Affairs Neal Lesher warned the proposal would undermine 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. While supporters of the bill describe it as targeting large technology companies, the PA Chamber emphasized that the costs would ultimately be passed on to businesses that rely on digital platforms to reach customers – especially small businesses. “Making advertisements more expensive under this legislation will also make ads more expensive for the restaurant trying to promote their weekly specials – they simply can’t afford that,” Lesher said. During his remarks, Lesher debunked 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 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, which most small businesses could not afford. 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. A Broad Coalition of Opposition The PA Chamber was joined in opposition to the bill by a wide range of voices, including the National Federation of Independent Business (NFIB), House Republican Whip Rep. Tim O’Neal (R-Washington), and small business owners from across Pennsylvania. Rep. O’Neal emphasized the importance of digital advertising as a modern business tool. “Digital ads are the new newspaper ads—the easiest way for businesses to get the word out,” he said. “They should not be unduly burdened.” Across the board, speakers raised a common concern: H.B. 1678 would increase costs for small businesses and, ultimately, for consumers. What’s Next The legislation has passed the Pennsylvania House and now awaits consideration in the Senate Finance Committee. The PA Chamber is urging Senate lawmakers to reject the bill and instead support policies that promote growth, strengthen Pennsylvania’s competitiveness, and avoid placing new taxes on tools that businesses rely on every day. Want more? Click here for photos from the press conference. Click here for a video outlining why the Digital Ads Tax is a bad idea.