The state House voted Tuesday to advance legislation to create a digital ad tax, which proponents say would generate at least $330 million in revenue for the state. But similar efforts in other states have been tied up by legal challenges.

House Bill 1678 would make digital advertising subject to the state’s gross receipts tax, a move proponents say would be directed to provide additional property tax relief for seniors.

The bill exempts news media websites from the advertising tax.

The Pennsylvania Chamber of Business and Industry opposes the measure. In a social media post before Tuesday’s vote, Neal Lesher, vice president of government affairs for the chamber, said the ad tax would drive up costs for Pennsylvania businesses.

“When a business buys advertising online, they do it through Google, Facebook, Instagram, YouTube or any other platform. When there’s a tax on that purchase, the cost of the tax doesn’t just magically stay on the platform, they pass those costs along to their consumers,” Lesher said. “And in this case, the consumers are Pennsylvania businesses trying to reach new clients, sell a product, or hire workers.”

Maryland was the first state to enact a digital ad tax in 2021. However, the Maryland digital tax has been bogged down over legal challenges, largely linked to a federal law barring states from “discriminatory taxes on electronic commerce.”

The Internet Tax Freedom Act bars states from charging taxes on digital advertising that is not collected on advertising through other types of media, such as billboards, newspapers or television.

Rep. Aerion Abney, D-Allegheny, said that as a parent of young children, he routinely gets advertising for children’s games because his children play online games using a shared family account.

Abney said he would like to have the “peace of mind” knowing mega-billion-dollar corporations will be paying their share” due to the digital ad tax.

Republicans criticized the legislation saying that it does not spell out how the money would be distributed to the state’s elderly population or whether there would be income limits.

Rep. Robert Leadbeter, R-Columbia, said businesses and organizations that serve seniors would be subject to the tax if they use digital advertising to seek customers.

“We have industries like Medicare Advantage plans, prescription drug plans and healthcare services; life insurance and final expense insurance; retirement income, planning and annuities; estate planning, elder law services, hearing aids and hearing care services; dental implants, vision care,” he said. “The list goes on … of industries that use digital platforms and digital advertising to better reach the senior citizens that they support.”

The legislation could be driving up costs for the very people lawmakers say they want to help with the revenue, he said.