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Hawaii's Amazon Tax Bill - The Implications On Hawaii's Tech Industry

Aloha, currently Hawaii legislators are trying to pass an Internet tax law. Yes, Hawaii legislators think you should be paying even more taxes. Normally I am not a political person but after reading this bill I strongly believe this is bad for Hawaii.

 

The scary part is If you take a deeper look into this proposed bill you will see it has a dramatic negative affect on Hawaii's tech industry.  This includes the entire online media (content sites, photographers, video, bloggers, social marketers) and even the software industry (Video games, Apple and Android apps).  Please read my testimonial below on how this will affect our industry. 

 

Take Action Today

1.  Please contact your legislators today.  View their emails and phone numbers here.

http://www.capitol.hawaii.gov/session2011/members/senate/senatememb...

2.  Public awareness helps.  Go ahead and tweet and share this on Facebook or other social media outlets.

 

Here is my recent testimonial sent to the Hawaii State Senators.

 

Honorable Hawaii State Senators,

My name is Dean Takamine, I am the President of Synertech Media LLC a Internet Marketing company based in Honolulu, Hawaii.  I have been in the Internet Marketing business for over 8 years.  I am providing a testimonial to HB1183 also known as the "Amazon Tax Bill".  In particular, I would like to clarify some common misconceptions about this bill and it's impact on Hawaii.

I would like to inform you on 3 very important issues about HB1183.

1.  The consequences of HB1183.
2.  How much tax revenue would HB1183 generate.
3.  Who would benefit from this bill.

1.  The consequences of HB1183.

HB1183 will hurt Hawaii's Online Media Industry as it will handicap them by limiting their revenue options.  I also believe it will hurt our rapidly growing markets like social marketing, blogging, online videos (Youtube), photographers and even the software industry (Apple iPhone Apps generate revenue with advertising). 

Competing mainland and international companies will have a competitive advantage in generating revenue.  This will cause a "brain drain" as these companies will have no choice but to take their business to another state or internationally.  Millions of dollars in advertising revenue would be lost, most of this revenue comes from out-of-state.

2.  How much tax revenue would HB1183 generate.

This bill will not generate the income most people believe.  This is because all of the large online retailers will just terminate their relationships with Hawaii advertising affiliates, thereby not needing to collect any taxes from Hawaii residents.  What this means is we would not be able to collect even one penny from Amazon.com.  I can't overstate this enough, we would not be able to collect one penny from every major online retailer that does not have a physical storefront in Hawaii (i.e. Amazon.com). 

What we will end up doing is losing millions of dollars in affiliate advertising revenue (Virtually all this revenue comes from out-of-state).  This bill will end up costing Hawaii more money than it generates.  We will have to spend money to regulate this tax.  On top of that, we will need even more money set aside for litigation.

3.  Who would benefit from this Bill?

The real benefit of this bill is the Big Box Retailers like Best Buy, Walmart, etc.  They are spending millions of dollars to lobby across the nation and to fool the public that they are "pro small business".  They are making a case for a Internet tax help small businesses.  Since when is Walmart pro small business?  Will Hawaii fall for this trap? 

The state of Illinois recently passed a similar bill and here are some recent quotes by the media. 

"Wal-Mart welcomes Amazon and Overstock Illinois Affiliatesl"
"Sears Holdings Applauds"
"Walgreens Congratulates Illinois"
"Maybe Gov. Quinn of Illinois should have figured something was up when Walmart put their full support behind it."

Illinois effectively eliminated jobs and lost millions of dollars in state revenue.  For what reason?  They will not collect one penny from online retailers like Amazon.com.

Please connect the dots

Once you are able to see the true consequences of HB1183 you will realized just how damaging this bill is.  HB1183 does nothing to generate revenues while killing off millions of dollars flowing into the State. 

I would like to conclude, that we all agree that Hawaii needs to diversify it's economy.  Hawaii's Online Media and Software Industry is a rapidly growing and clean industry. It is low impact and a vast majority of its revenues come from out-of-state.  We should be promoting this industry not creating a bill like HB1183 and destroying it. 

I urge you to "connect the dots" and vote for the people of Hawaii not the Big Box retailers.  Please vote "No" on HB1183.

Mahalo for your precious time.

Aloha,
Dean Takamine
President, Synertech Media LLC

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Comment by Dean Takamine on March 24, 2011 at 1:48pm

Just got an update on the bill.

The effective date of the bill is really called a “defective date.”  Legislators put it into bills to ensure that a bill doesn’t accidentally pass both chambers. The date effectively makes the measure “defective” so the dates are only changed to their more realistic effective dates once both chambers actually agree on the substantive bill language.

 

The new “nexus” bill – SB 1355 – will next be heard by House Finance Chair, Marcus Oshiro. 

 

Oshiro ,  Marcus R. (D) 

Hawaii State Capitol, Room 306

Phone 808-586-6200

Fax 808-586-6201

E-Mail: repmoshiro@Capitol.hawaii.gov

District 39Wahiawa, Whitmore Village, Launani Valley

 

 

Comment by Dean Takamine on March 24, 2011 at 1:06pm

Yesterday there was a hearing on this bill.  Here is the details on what happened.

Sen. Fukunaga gutted HB 1183 (Amazon Tax Bill) and replaced it with her bill, SB 1355 – the Streamlines Sales/Use Tax.  She did this because Rep. McElvey, Chair of Economic Revitalization and Business, gutted her bill, SB 1355, and put in the entire contents of HB 1183. So the bill is still alive – in another form. I will let you all know when the next scheduled Finance hearing is.


For those that want your voice to be heard and want to educate Representative McKelvey on the true impact of this bill here is Representative McKelvey's contact information.

McKelvey ,  Angus L.K. (D)
Hawaii State Capitol, Room 427
Phone 808-586-6160
Fax 808-586-6161
E-Mail: repmckelvey@Capitol.hawaii.gov District 10
Lahaina, Kaanapali, Kapalua, Maalaea, Kihei

Comment by Dean Takamine on March 23, 2011 at 12:31pm

Heh.. 

"Effective July 1, 2112. (HB1183 HD2)"  I don't think I care any more, I'll be dead by then ;)

I'm sure it will get amended but that is classic.

 

Comment by Dean Takamine on March 23, 2011 at 12:26pm

Hi Paul, thanks for the comment. Please contact your representatives and educate them on this bill.  There is a public hearing on this bill today at the State Capitol.  Emailing is great but there is great influence in talking to them over the phone.  Most people don't realize they have access to their representatives.

http://www.capitol.hawaii.gov/session2011/members/senate/senatememb...

 

I don't want to get too political, but I believe, in general Politicians are not held accountable to the general public, they serve the people that vote and special interest groups (follow the money).  So what can we do?  I believe "we" can be an active special interest group.  A forum like the Hui or any organization of people can bring change.  In fact Hawaii's tech industry should band together and "leverage" our use of technology (social marketing, social hacking, twitter, facebook, meetups, guerrilla marketing, youtube) to hold Politicians accountable and bring change to Hawaii.

Comment by Paul Graydon on March 23, 2011 at 12:17pm

Heh.. 

"Effective July 1, 2112. (HB1183 HD2)"  I don't think I care any more, I'll be dead by then ;)

Comment by Paul Graydon on March 23, 2011 at 11:52am
What can we do to react quicker on this stuff?  I have good family contacts with at least one House Rep whom I could have contacted if I'd realised what was going on.  Looking at the measure history it's been kicking around government for a couple of months now.  Is there any way we can catch Internet or Technology related bills on introduction or first reading?
Comment by Cameron Souza on March 23, 2011 at 12:38am
Why do these jerks keep reintroducing the same ruinous bill? This actually looks like an expansion of HB1405. Who introduced it? Who are its big supporters? Lets vote these people out of office!! Its hard enough trying to run a web or mobile apps company in Hawaii without these people inventing new ways to tax us.
Comment by Dean Takamine on March 22, 2011 at 5:55pm

Thank you Daniel for featuring this post.  A lot of people don't realize that back in 2009 a similar bill almost became law.  It passed the House and Senate, but fortunately Governor Linda Lingle vetoed the bill.  Now we have a new Governor and the law makers seem so desperate and short sighted that this bill has already made its way pass the House and to the Senate.  Please contact your Senators today.

http://www.capitol.hawaii.gov/session2011/members/senate/senatememb...

Comment by Daniel Leuck on March 22, 2011 at 5:42pm

Thank you for bringing this important bill to our attention. This is HB1405 all over again. Its a terrible, terrible idea that will hurt small web based businesses. You are spot on in your assessment that it will bring in virtually no revenue because affiliate networks will simply stop servicing Hawaii (they've already said as much.) We strongly encourage TechHuians to write their senator today.

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