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On January 28, 2019, a bill was introduced in the Pennsylvania General Assembly that would create a new excise tax on sales of video games with the most restrictive content-based ratings. This bill, if enacted, may be subject to challenge under both the U.S. and the Pennsylvania Constitutions.

Authors: Brent K. Beissel

Pennsylvania House Bill 109, which was introduced by Representatives from Delaware, York, and Philadelphia counties, would impose a 10% tax (the “Video Game Tax”) on each retail sale of a video game with a “mature” or “adults only” rating, as determined by the Entertainment Software Rating Board (“ESRB”). The bill was referred to the House Committee on Finance. An identical bill (House Bill 2705) was introduced toward the end of the last legislative session.

The ESRB was established in 1994 as a response to public criticism over the increasingly graphic content of video games. The ESRB assigns ratings to video games available to consumers based on the content of the games, similar to the rating system used for motion pictures. The ESRB rating system applies to games purchased from a physical store location and games that are directly downloaded to a game system, PC, or mobile device. The ESRB’s “mature” rating is used when it is determined that the content of the game is suitable only for an individual 17 years of age and older. The “adults only” rating is used when it is determined that the content is suitable only for individuals 18 years of age or older.

The Video Game Tax would be imposed and collected in a manner similar to Pennsylvania’s sales tax, but would be imposed in addition to the sales tax.  For example, if a consumer purchased a game with a “mature” rating from a Harrisburg retailer for $60, the consumer would be obligated to pay the 6% sales tax ($3.60), plus the 10% Video Game Tax ($6.00).  Thus, the consumer’s out-of-pocket cost for the game would be $69.60.  Like the sales tax, the retailer would be responsible for collecting and remitting the Video Game Tax to the Department of Revenue.  Under the proposed bill, all money collected from the Video Game Tax would be deposited into a special fund, earmarked for enhancing school safety measures.