<p class=ldtitle>A BILL to amend the Code of Virginia by adding in Chapter 17 of Title 58.1 an article numbered 13, consisting of a section numbered 58.1-1749, relating to tax on electronic distribution of material harmful to minors.</p>
Summary
HB720 would create a new 10 percent tax on the gross receipts of commercial entities operating an “adult website” for sales, subscriptions, memberships, performances, and other content that qualifies as material harmful to minors and is produced, sold, filmed, generated, or otherwise based in Virginia. The bill defines “adult website” by reference to the presence of a substantial portion of harmful-to-minors material and incorporates existing Virginia law for the definition of that term. It also directs the Tax Commissioner to issue public implementation guidelines, exempting those guidelines from the Administrative Process Act.
The bill further specifies that revenue from the tax would be deposited into the Behavioral Health and Developmental Services Trust Fund. Administration and enforcement would be handled by the Department in the same manner as the retail sales and use tax. The bill includes a nonseverability clause, meaning if any provision of the first enactment is struck down as invalid or unconstitutional, the provision would not be treated as severable.
Impact
If enacted, HB720 would add a new article to Title 58.1 of the Code of Virginia creating a targeted excise-style tax on certain online adult-content businesses with a Virginia nexus. It would expand the state tax code to cover digital distribution of content deemed harmful to minors, impose compliance and collection duties on the Department of Taxation, and channel the resulting revenue to the Behavioral Health and Developmental Services Trust Fund under § 37.2-318. The bill would also give the Tax Commissioner authority to issue implementation guidance outside the normal Administrative Process Act rulemaking process.
Sentiment
The available legislative history shows limited recorded debate, but the bill was not rejected outright and instead was continued to the next session in the Finance Committee by voice vote. That procedural outcome suggests the measure drew enough interest to remain under consideration, while also indicating that members were not ready to advance it immediately. Because no committee transcript or recorded vote details are provided, the overall sentiment can only be characterized as cautious or unresolved rather than clearly supportive or opposed.
Contention
The main points of contention are likely to be the bill’s targeting of adult websites and its attempt to tax speech-related digital content, which could raise First Amendment and constitutional concerns. The nonseverability clause heightens that risk by tying the bill’s provisions together if a court invalidates any part of the first enactment. Additional likely concerns include how “material harmful to minors” and “substantial portion” would be applied in practice, whether the tax would be difficult to administer for online businesses, and whether the measure is a tax policy tool or a regulatory penalty aimed at discouraging adult content. No specific speakers or formal objections are included in the provided record.