Games? eBooks? Music? There’s a Tax for That

Digital Downloads Tax Takes Effect Today

August 1, 2016, Harrisburg, Pa.—Pennsylvanians who didn’t stock up on iTunes, eBooks, and game apps yesterday will begin paying more today, as the 6 percent sales tax on digital downloads, satellite radio, and streaming video and audio such as Netflix, goes into effect.

The tax, part of a $650 million tax increase lawmakers and Gov. Wolf agreed to last month to help fund their $1.6 billion spending increase, is projected to bring in nearly $47 million in 2016-17. 

“Lawmakers and Gov. Wolf claimed higher taxes were needed to meet spending needs, but that’s a backwards claim,” commented Nathan Benefield, vice president of policy for the Commonwealth Foundation. “In reality, Harrisburg has a spending addiction, and Pennsylvanians are now being forced to pay more for their Netflix and Kindle books to fund it.”

The digital downloads tax is just one of several new taxes slated to hit Pennsylvanians in the coming weeks and months, including a cigarette tax hike, a new tax on e-cigarettes and smokeless tobacco that may force many vape shop owners out of business, and a higher tax on banks’ savings. 

“The irony is that the entire $650 million tax hike is less than the $700 million the state will dole out in corporate welfare this year—including to corporations like Netflix and Amazon,” Benefield added. “Pennsylvanians have every right to be concerned that they will have to pay more while Gov. Wolf and lawmakers have yet to address pension reform, welfare reform, or corporate welfare spending.”

Nathan Benefield and other Commonwealth Foundation experts are available for comment. Please contact John Bouder at 570-490-1042 or jrb@commonwealthfoundation.org to schedule an interview.

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The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.